An initiative by Woolworths' Australian supermarkets to buy milk directly from its dairy farmers in reaction to its concern about the viability of the industry is unlikely to be replicated in New Zealand.
That is because the milk market in New Zealand is completely different from the Australian market where a milk price war ignited by Coles in January 2011 with $1 a litre milk is putting pressure on farmers.
The Australian Woolworths chain is expected to unveil plans to buy milk directly from Australian dairy farmers as part of a campaign to demonstrate its concern about the industry's viability.
Progressive Enterprises managing director Dave Chambers said he would not have thought Woolworths would follow the Australian lead because the milk industry was so different even though the countries were close neighbours.
"They are completely different markets and we work with New Zealand suppliers for the benefit of New Zealanders."
Unlike Australia's low retail prices brought on by competition New Zealand milk has hovered around a higher level in line with world markets.
New Zealand milk prices are lower than their 2011 high with Countdown selling a homebrand two-litre bottle of milk this month for $2.98, down from $3.60 in March 2012.
However, international prices were on the rise and the question had been raised whether domestic milk would go up again as supplies reduce from drought and tighter supplies internationally.
Woolworths' Australian supermarkets sell milk for $1 a litre, but according to a story in Melbourne's The Age newspaper Woolworths is no fan of the milk price war.
A Farmers Own brand of milk bought from dairy farmers at an expected fair price was due to start this week with milk processors who previously supplied the milk continuing to process it for Woolworths.
Woolworths questioned the sustainability of the low prices in a submission to a Senate inquiry about Australian milk competition and pricing in 2011.
- ? Fairfax NZ News
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