PRICE war protagonist, Coles, is trying to deflect some of the intense scrutiny and criticism of its massive milk discounting campaign onto the publicity-shy milk processing sector.
It says milk companies should be more transparent about how they set farm gate payments and should be contributing more to the heated $1 a litre price debate.
In particular, the supermarket giant is pointing the finger at overseas-owned Parmalat and National Foods, suggesting they could be more "up front" about the calculation strategies they use to value milk the buy from farmers.
Farmers and numerous other critics of Coles' discounting offensive say the retailer is undermining the entire fresh milk supply chain's sustainability by selling milk at a loss, with farmgate prices, branded milk sales, smaller retailers and distributors all being squeezed.
Fighting accusations of blatant predatory and anti-competitive behaviour, Coles Supermarkets managing director, Ian McLeod, this week stepped up the retailer's efforts to win support from dairy farmers and consumers, insisting it was "not out to hurt dairy farmers" by cutting milk prices.
Mr McLeod said by cutting food inflation to deflation, Coles was saving Australian families' grocery bills about $1 billion a year.
Coles spokesman, Jim Cooper, said the company had done its best to reassure farmers it was absorbing the full cost of the four to 33 per cent discounts to its house brand milk lines and had also begun paying, National Foods, a higher price for the Coles generic milk contract just weeks before slashing its store prices.
"We don't deal direct with farmers to buy our milk, but we have a lot of empathy with them. We think there's an element of this debate that is being overlooked," Mr Cooper said.
He said if Coles' use of just five per cent of all milk produced in Australia was supposedly directly threatening the viability of processors (and therefore farmers), the milk companies should be explaining themselves and showing how their earnings retention figures were under pressure.
While "others" claimed the explosion in generic milk sales undermined branded milk sold under processors' own labels such as Dairy Farmers, Pura or Pauls, and stripped away their profit margins, he said it was interesting that "not a lot" was being said on the topic by National or Parmalat.
National Foods, part of the Japanese beverage giant Kirin Group, has limited its comments about the impact of the supermarket milk price war to saying the "dramatic pricing change was a complex issue that would clearly affect the white milk category".
National has also confirmed new farmgate milk contract talks with 1820 of its farmer suppliers for the 2011-12 year failed reach agreement before last month's deadline, but said negotiations had no relation to the Coles milk price issue.
"We are in gentlemanly conversations with the Dairy Farmers Milk Co-operative (DFMC) and believe we will come to an agreement in March," a company statement said.
Queensland Dairyfarmers Organisation chief executive officer, Adrian Peake, said it was no surprise processors were minimising their comments about the contentious generic milk price.
"Processors are in a pretty awkward position. They're squeezed by the price competition between supermarkets, but they also must remain on good terms with the retailers who buy their product because these supermarkets have so much power," Mr Peake said.
"There's no doubt processors are losing milk market share for their proprietary brands - Australian generic milk sales have grown from 25 to 50pc in the past decade.
"After upsetting all the stakeholders in the dairy industry, Coles now seems to be feeling the heat and wants to divert the blame to processors," Mr Peake said.
"I only hope they're getting the message, because the public comments they've made are either wrong or just not the truth.
"If you really want to see where Ian McLeod and his English cricket team are taking Coles' cut-throat campaign, look at the UK where house brand milk has taken over - you need a search party to find a bottle of branded milk in a British supermarket."
Mr Peake said branded milk sales not only provided the profits processors needed to stay in business, but since Coles slashed house brand prices a month ago the impact on branded purchases had directly hit Parmalat suppliers with contracts were tied to daily sales of Pauls' fresh milk.
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