Parmalat is expected to be one of the few milk processors to benefit from Woolworths' new 'Farmers Own' milk venture which will see it buy milk direct from farmers.
The Brisbane-based company, which produces milk under the Pauls brand, has reportedly signed on to process the 'Farmers Own' product, which according to media reports, will be positioned as an unhomogenised, old-fashioned product.
The venture has yet to be officially announced, but the Australian Competition & Consumer Commission (ACCC) has confirmed that a group of seven farmers from the Manning Valley in northern NSW have notified them that they plan to collectively bargain with the retailer.
If the ACCC does not object, Woolworths has reportedly said it will buy the milk from group at what it perceives to be a fair price in a bid to address criticism that private label milk is hurting the dairy industry.
'Farmers Own' is expected to sell for more than $1 a litre, in contrast to the pricing strategy of Coles, which in January last year controversially introduced $1-a-litre milk.
Last year Woolworths questioned the sustainability of the low prices in a submission to a Senate inquiry into competition and pricing in the Australian dairy industry.
The ACCC, meanwhile, continues to investigate allegations by suppliers that Coles and Woolworths are abusing their market power.
Coles and Woolworths have been seeking to enter into a voluntary a code of conduct with the Australia Food and Grocery Council (AFGC), however, groups like the National Farmers Federation (NFF) are now calling for the introduction of a mandatory code of conduct for supermarkets, aimed at preventing a misuse of market power.
“After some months of discussion, we lack confidence that the voluntary code can deliver the strong outcomes that farmers expect – which is why we are calling on the federal government to work with us to deliver a sensible mandatory code,” NFF president Jock Laurie said in a statement last week.
The AFGC told Food & Drink Business that it welcomes the admission by Woolworths that $1 milk price was unsustainable.
“If Australia loses its food processing capability, we lose our food security, and the market dominance of the major retailers means their policies make or break key parts of the food processing sector,” said an AFGC spokesperson.
