Coles supports more dairy farmers with direct purchasing contracts

Coles is recruiting more dairy farmers from Victoria, the south east corner of South Australia and the Riverina in NSW to supply milk for the production of Coles Brand Australian cheese, offering transparent farmgate contracts of up to three years to provide farmers with greater confidence over their future income.

Coles launched its direct sourcing model in Victoria and Southern and Central New South Wales in 2019, contracting directly with local farmers to supply milk for Coles Brand fresh white milk in those markets and offering a competitive farmgate milk price.

Under the direct sourcing model, Coles offers a farmgate price directly to farmers, and pays dairy processors to process the milk under a toll processing agreement.

The model was rolled out in South Australia and Western Australia in 2020, with all Coles Brand fresh white milk in both markets now coming from directly-contracted farmers within their respective states.

Coles Brand Australian cheese is made using “100% Australian milk,” and is currently sourced from dairy processors who purchase milk from farmers, under contracts that allow the processor rather than Coles to set the farmgate price.

Under the new sourcing model, Coles will “offer a farmgate price directly to farmers, and pay Saputo to make Coles Brand cheese at its two Victorian facilities from the milk supplied by Coles under a toll processing agreement.”

Coles has similar toll processing arrangements in place for Coles Brand milk sourced directly from farmers in Victoria, Southern and Central NSW, SA and WA, and is in the process of putting a similar structure in place in Tasmania.

“Dairy farmers supplying direct to Coles can decide between one, two or three-year contracts, with transparent pricing, providing them with greater confidence over their income so that they can plan for the future,” Coles Supermarkets said.

Dairy farmer Peter Delahunty from Alvie in Western Victoria said that his three-year supply contract with Coles, signed in July 2020, was a game-changer for his dairy farm.

“Having direct access to the Coles Dairy Team was important to my business as it gives true meaning to ‘working as a team’,” he said. “The financial certainty of a three-year price and the day-to-day support of my farm has been the best I have experienced in my 46-year farming career.”

Coles General Manager for Dairy Charlotte Rhodes said the success of direct sourcing for Coles Brand milk and positive feedback from dairy farmers had prompted the expansion of the model to Coles Brand Australian cheese.

“Every time we have been to market looking to buy milk directly from farmers the response has been very positive, and we really value the relationships we have been able to build with our dairy farmer suppliers,” she said.

“We currently have over 60 Australian dairy farms supplying milk to Coles under direct contracting arrangements, and by sourcing directly for Coles Brand Cheese we expect to lift this number to around 100 Australian farms across the country supplying us with more than 400 million litres of milk every year.”

“Extending our direct-sourcing model is part of our commitment to investing in a sustainable future for the Australian dairy sector, and our farmers have told us that it has made a real difference for their businesses.”

In addition to creating a dedicated milk pool, Coles has established the Coles Sustainable Dairy Development Group, through which Coles invests directly in on-farm sustainability projects in consultation with dairy farmers.

Dairy farmers can find more information about Coles’ direct sourcing model at www.milkdepartment.com.au/

Coles extends direct-sourcing milk model to Tasmania

Coles is restructuring its milk supply chain to purchase milk directly from Tasmanian dairy farms for Coles Brand fresh white milk.

Under the new sourcing model, Coles will offer Tasmanian dairy farmers transparent farmgate contracts of up to three years, replacing the current model under which Coles Brand fresh white milk sold in Tasmania is sourced through processors, who set the price farmers receive.

Under a toll processing agreement Bega Dairy & Drinks will process and bottle milk sourced directly from Tasmanian farmers at their plant in Hobart to produce Coles Brand fresh white milk.

The new sourcing model will help ensure that all Coles Brand fresh white milk sold at Coles supermarkets and Coles Express stores in Tasmania continues to be sourced, processed and bottled in Tasmania.

South Australian Dairy farmer Glenn Dohnt from Monteith said signing a long-term agreement to supply milk directly to Coles last year provided certainty for his family’s dairy farm at Monteith, where he milks 700 cows.

“We have been waiting for a supply contract like Coles’ for a long time; it’s the perfect fit for us, a second-generation farming family who has been in the game for over 40 years,” he said.

“We place great value in the fact we are supplying milk to an Australian company and Australians every day. Coles is the best processor we have ever dealt with; the transparency, the long-term agreements and directly working with the Coles dairy team gives us confidence that our future is bright.”

Ms Rhodes said she was proud of the relationships Coles had built with dairy farmers across Australia to purchase their high-quality milk for Coles customers.

“We’re pleased to be investing in the sustainability of the Tasmanian dairy sector at the same time as ensuring we have locally-produced milk for our Tassie customers.

“Tasmanian dairy products are also popular with our customers in other states and we are proud to offer dairy products from Tassie brands like Pyengana, Meander Valley and Ashgrove in Coles supermarkets across Australia.”

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