WHILE Queenslanders remember the devastating impacts of natural disasters of last summer, the dairy industry has a dread of remembering the impacts of the man-made disasters which hit the industry on Australia Day 2011.
Unlike the impacts of the floods and Cyclone Yasi, the disastrous effects to the state's dairy industry of the Coles-led milk price war are growing by the day.
It is time to look back at last January 26 and what was said at the time and in the period since that terrible day, regarding this assault on the domestic dairy industry.
At the time Coles stated in their promotional campaign: "Coles is not reducing the price it pays to its milk processors either so this move will not impact them or the dairy farmers who supply them ... Coles is fully absorbing the price cut, bringing great value to customers whilst supporting Australian dairy farmers."
With this great fanfare Coles announced price cuts of up to 33 percent to Coles-brand milk.
Despite the assurances from Coles, every dairy farmer in Queensland knew that this would affect farm gate price either immediately or in the near future, as contracts came due for renegotiation.
Coles reassured dairy farmers that our milk price had increased in the previous 12 months and quoted Murray Goulburn (MG) farm gate prices to prove the point.
Using a MG supplier who has 96pc of their milk supply sold outside the liquid domestic trade (chiefly to export) as an example of the effects of discounted milk, always seems more than a small stretch in credibility.
Professor Stephen King from Monash University was then rolled out to tell us that oceans of extra milk would be consumed because of the discounting, despite repeated industry assertions of milk's largely inelastic nature.
Over the time since then, we have seen milk consumption per head increase by around 1.5pc ? with about 1.5pc increase in sales coming from population growth that would have occurred, milk war or not. So apparently, the ocean of milk sales we were promised was at a permanent low tide.
Then when the Senate Inquiry was initiated, and the sensitivities of the situation had surfaced, Coles was at pains to explain the price cuts were actually only 4pc and questioned how could this small reduction cause any problem.
Coles successfully downplayed their influence on the marketplace to a majority of Senators, who either didn't understand the milk pricing system or simply didn't want to acknowledge the problem, while consumers were getting cheap milk and Coles was helping the government with the crusade against inflation in a sensitive political poll en- vironment.
Coles' strategy has an extremely similar look to the Tesco model that has been in place in Britain.
Tesco discounted product, built up the market share of their own supermarket brands, discounted again, built up market share again. and then increased their margin.
Consumers were left with little or no choice on the supermarket shelf.
Do you see a pattern emerging?
Fresh milk, due to its unique nature as an everyday dietary staple of our society, has formed a significant part of Coles' total strategy.
Their own data states that milk contributes nearly 25pc of total savings to consumers.
I am sure what riles dairy farmers as much as anything is the fact that market-share targets ? and therefore, most likely, the linked executive bonuses ? have been achieved at their expense.
As talented and clever as the Coles CEO, Ian Macleod, obviously is, it is hard for me to come to terms with his $43,000-a-day pay packet, based on media reports, given the damage that the Coles policy has caused the Queensland dairy industry.
While Woolworths and other retailers have publicly acknowledged that milk at $1/litre is unsustainable and Woolworths has stated that they would not have undertaken such a strategy, all supermarkets have entered the price war.
The downward pressure on prices down the supply chain is there regardless of which supermarket brand name is on the bottle.
At the farm gate, the past year has seen milk prices drop further in real terms across the board with some dairy farmers that are renewing contracts for 2012 considerably down on last year's price.
This of course raises one fundamental question that needs to be asked of our politicians, the ACCC, and Coles themselves: if the discounting of milk has not caused the drop in farm gate price we have seen and are continuing to see, then what has?
Retailers, vendors, processors and dairy farmers all have an important role to play in the whole milk supply chain and when one sector takes a short term decision in their own interest alone, the long-term negative outcomes for other supply chain stakeholders can be devastating.
Relationship s within the supply chain have always had their challenges but this latest price war has moved the whole value chain into a whole new ball park that is simply not sustainable in the medium to long term.
It often seems that other sectors of the value chain have been, over the year, reluctant to publicly criticise their powerful customer, on whom they rely for large chunks of their business, in offering their products to Australian consumers.
Unfortunately, it seems most people will take the maximum advantage of a situation if they are able to, without caring for the consequences of their actions on others or on the nation as a whole.
Unfortunately, it seems that many consumers do not understand the consequences of their daily purchase choices on their future, others' futures and our nation's future. However the major supermarkets understand this all too well.
That is why we have a government to make laws for the greater good of the nation and the whole community but at this stage most of the politicians in the two major parties have shirked their responsibility in this regard.
As a result, all Australians including the small retailers, milk processors, dairy farmers and particularly the consumers that the ACCC ironically says it is concerned about, will pay the price for the lack of government action and the larger supermarket profits and growing dominance that follows.
The question now for the Federal Government is: will it act?
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