Dairy News Australia put a series of questions to Coles about how its drive to engage more suppliers will work.
Here are the company's answers:
Will the price offered for supply to cheese production be different?
Coles: No, we are offering the same prices for each solid regardless of how we use the milk — however it’s important to note that as we have separate prices for protein and butterfat the amount received by farmers will vary depending on their production. We provide an income estimate for farmers who are interested in supplying us, based on their production data.
Under the direct purchasing arrangement, does the farmer have any relationship with the processing factory?
Coles: No, the farmer does not have a relationship with the processing factory. The farmer has a relationship with Coles and its Milk Management Service Provider Milk Department.
Does Coles provide any supplier support in terms of professional development, guidance for issues like high somatic cell counts or seasonal issues?
Coles: Yes, farmers supplying Coles do receive extension support and guidance on issues mentioned above from Coles’ Milk Management Service Provider Milk Department, whose team have dairy expertise. In addition, farmers supplying Coles join the Coles Sustainability Dairy Development Group, which works with farmers on sustainability and development initiatives.
How many direct suppliers does Coles currently have?
Coles: Just over 60. We expect this to grow to about 100 this year as we recruit the additional volume.
Do the direct purchasing agreements include rise and fall provisions for prices?
Coles: No. However farmers who have signed contracts with Coles have told us that locking in a long-term minimum price gives them the confidence they need to plan for the future.
What is the advantage for Coles in having direct agreements?
Coles: We get to work directly with our farmers to help grow our businesses together, and support the sustainability of the Australian dairy sector. Purchasing directly from farmers rather than through a processor enables Coles to determine the farm gate price it offers to farmers.
Is this working in other food purchasing by Coles?
Coles: We have direct relationships with thousands of Australian farmers across the beef and livestock industry (as an example, we work directly with more than 1000 Australian beef cattle farmers, and have signed up 30 since the start of the year), eggs and fresh produce, as well as packaged food and grocery.
What other support does Coles provide directly-contracted dairy farmers?
Coles: When a farmer contracts directly with Coles they also join the Coles Sustainable Dairy Development Group, through which Coles invests directly in on-farm sustainability projects in consultation with dairy farmers.
We’ve been providing farmers with:
● Mastatest machines.
● A defibrillator for the farm.
● Regular market reports and insights such as hay and grain market updates.
● We provide support to ensure our farmers have a COVID-safe business plan, and provide masks and sanitiser.
We also have a number of trials running with our contracted farmers, including the below. The majority of these ideas come from our farmers:
● A trial using new technology to mitigate heat stress.
● A trial group looking at on-farm safety through independent assessments.
● Working with university partners and Dairy Australia to assess new diagnostic tools for mastitis.
● We are setting up a trial of remote monitoring for milk vats.