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Shoppers resist high dairy prices

Posted on July 24, 2008, 4:04pm and updated on July 25, 2008 at 12:28 pm

Shoppers have cut back on buying brand name dairy products because of higher prices.

Dairy Australia team leader for strategic analysis Keith Lloyd told South East farmers on Thursday there was resistance from consumers to escalating food costs.

“Demand on the local market is being pulled back by higher prices,” Mr Lloyd said.

“Consumers are being squeezed”.

Cheese prices have risen 15pc and milk 12pc while the current inflation rate is officially 4.3pc.

“As values go up the volumes go down,” Mr Lloyd said.

“There has been negative volume growth for cheese.

“Milk is much less sensitive to price increases and butter is holding up well.

“We expect milk volumes to continue to grow, but research shows consumers are trading down from brands to private labels; from modified milk to whole milk.”

Mr Lloyd said farmgate prices had climbed about 45pc in the past year and were up 8-15pc this season.

“Confidence (among farmers) is high depending on seasonal conditions,” he said.

MICHAEL GOREY

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