Australia’s second largest fresh milk producer, Paramalat, has raised concerns over Coles’ $2 billion private label milk supply deal with the Murray Goulburn Co-op.
Paramalat chief, Craig Garvin believes that the deal will threaten to disrupt and potentially divide the dairy industry and that uncertainty among farmers is rising as to the true value of the deal.
“There’s a lot of scepticism among farmers and they’re really now starting to look through this deal and what’s really in it,” he told the Australian Financial Review.
“This is potentially a very divisive and disruptional strategy, I think farmers should be nervous.”
Garvin expressed his concern for farmers outside of Victoria and for foreign-owned processors.
He believes the 10-year milk supply agreement may benefit Victorian farmers, however how this deal will affect dairy producers in the other Australian states remains to be seen.
"This is not about foreign or local processors but long-term industry sustainability," Garvin said.
"The future of the industry would be better served through long-term contracts between farmers, processors and retailers."