Saturday, January 16, 2010

Melbourne - where the milk is surprisingly expensive

You could be forgiven for feeling short-changed as you're pouring your milk.

Milk drinkers in Sydney, Brisbane, Adelaide, Perth and Hobart have enjoyed substantial cuts over the past year of 9, 8, 12 and 17 cents per litre.

But in Melbourne the average fresh milk price has fallen half as much - by 4 cents per litre at the time when the other cities were getting their big cuts and then by a further 1.5 cents to make a total cut of 5.5 cents.

The figures are average prices collected by the army of shadow shoppers who visit supermarkets and corner stores on behalf of the Bureau of Statistics each quarter to compile the consumer price index.

Whereas in the first half of last year the average Sydney price of a standard 2 litre bottle slid from $3.61 to $3.41 - a drop of 10 cents per litre, in Melbourne it slid from a higher $3.69 to Sydney's starting price of $3.61 - a drop of just 4 cents per litre.

The first six months of 2009 are important because they are period when the government removed the 11 cents per litre levy introduced in 2000 to fund the Dairy Industry Adjustment Program.

Agriculture Minister Tony Burke asked the Competition and Consumer Commission to check that the price cut was passed on and said "people should be paying 11 cents a litre less for their milk shortly after the levy is removed".

A Freedom of Information Inquiry by the Age suggests the checking was limited. The ACCC wrote to eight outside organisations but prepared no document summarising their responses and no report to the Minister.

Coles, Safeway and Aldi passed on the cut in full on their own and other brands. But Coles has told The Age that weeks before the February price cut it passed on a 4 to 5 cent price rise from Parmalat, the Italian food giant that produces bands including Pauls, REV, SkinnyMilk and Physical, all of which "have a significant share of the Victorian milk market, but only have a minor presence in NSW".

Parmalat has confirmed the hike but says it represented a year of pent-up cost increases.

Published in today's Age

Graphic: Channel 4

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