Coles’ Acquisition of Saputo Plants: A Power Grab That Threatens Australian Dairy Farmers

In June 2024, supermarket giant Coles completed a $105 million acquisition of two key fresh milk processing plants from Canadian dairy multinational Saputo—one in Laverton North, Victoria, and another in Erskine Park, New South Wales.

What was presented as a commercial deal has raised alarm bells across the dairy industry, particularly among farmers in Victoria’s north-east and other key regions.

Critics argue this vertical integration massively concentrates power in the hands of one retailer, further squeezing already struggling family farms.

The Deal And Its Implications

Coles, already a dominant buyer of raw milk, now controls processing facilities critical to the fresh milk supply chain in two major states.

Previously, these plants handled milk for Coles’ private-label products under arrangements with Saputo.

Post-acquisition, Coles gains direct oversight of processing, while Saputo continues some farmer relationships but exits parts of the fresh milk market.

Farmers and groups like Australian Dairy Farmers (ADF) warned the Australian Competition and Consumer Commission (ACCC) during the review process.

Concerns included:

• Reduced competition for raw milk
• Less transparency in pricing
• Coles’ ability to favour its own brands while pressuring suppliers

The ACCC approved the deal despite preliminary concerns about structural changes in the market, but farmer groups have called it a decision they may come to regret.

How This Hurts Farmers

Dairy farmers in north-east Victoria and beyond are already battling:

• High input costs (feed, energy, fertiliser)
• Water challenges
• Labour shortages
• Volatile markets

This acquisition exacerbates the pain:

Squeezed Margins

With Coles controlling more of the chain (retail + processing), it can prioritise low private-label prices that boost its profits while passing minimal gains to farmers.

Historical “milk wars” showed how $1/litre pricing devastated farms; vertical integration risks repeating this with even less counterbalance.

Reduced Competition

Fewer independent processors mean farmers have less bargaining power and fewer places to sell milk.

In Victoria, where production is significant, this could accelerate farm exits, especially for smaller operations.

Lack Of Transparency

Integrated operations obscure fair farmgate pricing, making it harder for farmers to negotiate or understand value distribution.

Broader Industry Impact

Consolidation favours scale over family farms.

Farmers like those in the Goulburn Valley and Kiewa areas report ongoing financial stress, with some warning of more closures without intervention.

This isn’t just about one deal—it’s part of a pattern where supermarkets’ dominance (Coles and Woolworths control a huge share of groceries) distorts the entire supply chain against producers.

What Can Be Done To Help Farmers?

Farmers aren’t powerless.

Here are actionable steps at individual, collective, and policy levels:

1. Support Farmer-Owned Co-Ops And Independents

Models like Mountain Milk Co-operative in the Kiewa Valley give farmers:

• Control
• Better pricing power
• Focus on local and value-add markets

Examples include:

• Cheese
• Ice cream
• Other premium dairy products

These markets are less reliant on supermarket giants.

Seek out premium independents like Gippsland Jersey, which prioritises farmer payments over volume deals.

2. Diversify Markets

Invest in:

• On-farm processing
• Direct sales
• Farm gates
• Farmers markets
• Online sales
• Export opportunities
• Specialty products
  • Organic
  • Grass-fed

Government grants through Agriculture Victoria can support this transition.

3. Strengthen Collective Bargaining

Join or form groups under ACCC notifications for better negotiation.

ADF and Dairy Farmers Victoria provide advocacy and resources.

4. Policy And Regulatory Push

Call for:

• Stronger oversight of supermarket power
• Mandatory codes with real enforcement
• Priority access to fuel and inputs during crises
• Fairer water policies

Support calls for higher retail prices that actually flow back to farms—recent small increases show consumer awareness can help.

5. Consumer Action

Shop local and independent brands.

Every litre from a farmer-focused supplier helps sustain rural communities.

6. Peer Networks And Support

Engage with:

• Alpine Valleys Dairy Inc.
• Young Dairy Network
• Mental health resources

Industry stress is real, and connection matters.

The Bigger Picture

Australian dairy farming has deep roots in family operations producing high-quality milk.

Coles’ move risks accelerating their decline unless balanced by:

• Stronger farmer voices
• Smarter diversification
• Policy reform

Farmers, industry bodies, and consumers must work together to ensure the chain rewards those at the start—not just the checkout.

Final Thought

This article is for awareness and discussion.

Farmers facing hardship should contact Dairy Australia or local support services.