Coles says it will be appearing before a Senate committee hearing into its milk pricing.
The supermarket giant said in a statement that the committee hearing, which will take place on Tuesday 22 March, will “provide greater transparency and understanding of the milk supply chain, and the factors that drive the farm gate for Australian dairy farmers”.
Coles slashed its home brand milk prices down to $1 a litre in January, which has since seen Woolworths, Aldi and Franklins doing the same.
This resulted in dairy producers and smaller retailers lodging submissions against the heavy discounting by the supermarket chains.
According to Coles, the farm gate price dairy farmers receive is set by the world price because around half of Australian milk products are exported.
“The farm gate price is rising because global demand for milk product is rising,” it said in a statement.
“Coles has no direct influence over farm gate prices because Coles buys milk from processing companies, not from dairy farmers.
“Coles paid a higher commercial price to these milk processing companies for Coles brand milk in mid-January so they would not have to pass on a lower price to dairy farmers.”
It also says that it discussed price reductions with milk processors and has met with the peak milk industry organisation, Australian Dairy Farmers, and other farmer organisations.
The company said its aim was to meet consumer demand without hurting suppliers.
“Coles’ customers want high quality fresh milk at the lowest possible price. To achieve that, Coles’ is paying milk processors more for their milk, and fully absorbing lower retail prices. That is a win for the Australian dairy industry and a win for our customers.”