Goyder defends Coles $1 per litre milk sales strategy

06 Nov, 2017 10:31 AM
Comments
0
 
Wesfarmers Managing Director Richard Goyder at the National Press Club in Canberra this week.
Wesfarmers Managing Director Richard Goyder at the National Press Club in Canberra this week.

Outgoing Wesfarmers Managing Director Richard Goyder has fired a parting warning shot at the federal government while defending his giant company’s involvement in selling $1 per litre milk.

Mr Goyder addressed the vexed issue, that’s upset the dairy sector but he says is welcomed by consumers, during his address at the National Press Club in Canberra this week where he used it as an example to say excessive or needless political interference in retail activities, was restricting economic growth that also performed social good.

“Whenever we have a problem we seem to regulate our way through the problem rather than letting things fail, or dealing with problems through the organisation,” he said.

Mr Goyder said up to five inquiries had occurred into the price of milk but that wasn’t the solution.

“What the dairy industry in this country needs is world class infrastructure to get its product to markets – it doesn't need the Senate to inquire into that,” he said in reference to multiple inquiries conducted by the federal Senate and other agencies into retailers selling milk for $1 per litre milk which started in early 2011.

Mr Goyder said Coles - of which Wesfarmers is the parent company - had also paid milk processors more for their product; an assumption that they’d they passed that potential profit back to dairy farmer suppliers.

He said Coles and Woolworths weren’t the only retailers in focus for the strategy described by its critics as “unsustainable” with Aldi selling three litre milk products at $2.99 while Costco sells it for $2.85.

Mr Goyder said retail food customers on an average family budget of $152 per week, involving two adults and two children, living in major capital cities like Sydney and Melbourne, welcomed the savings on milk.

“The price of milk actually matters to the people we’re servicing, which is millions of ordinary Australians,” he said.

Mr Goyder said if consumers were asked to pay $1 per litre for milk, or $1.20 knowing the additional 20 cents was returned to dairy farmers, 100 per cent of them would purchase the more expensive product.

But he said at the supermarket, they still buy the $1 per litre milk items.

That’s despite Barnaby Joyce and others offering criticism for retailers selling bottled water for higher prices than milk.

Mr Goyder said he had “no issue” with the $1 per litre milk sales strategy and warned there were other “speed bumps” that slowed economic growth and effectiveness, like political inquiries.

“For some reason in Australia, we have put more speed humps in the way of big business,” he said.

“I cannot understand why a job in Coles in any less valuable than that of a corner store.

“Indeed, we have to live by all the rules and regulations with regards to safety, ethical sourcing, and the like, so why are we penalised with higher tax rates?

“On average Coles engages with about 100 regulators nationally which requires them to manage more than 230 regulator contacts each and every month.”

Mr Goyder was appointed Wesfarmers Managing Director in 2005.

His address also referred to the impact of “fake news” and “incompetent” politicians, or “populist politics” on the quality of life in Australia and economic activity.

“We now live in a world where growing income disparity and social insecurity is being exploited by identity politics and fed by instant communications and short termism,” he said.

“The resulting populist political push is challenging many aspects of capitalism while promoting a view that nationalism, closed-border isolationism and re-regulation offer solutions to the growing economic and social concerns being felt by people worldwide.

“As part of this process, the populist agenda challenges the ‘elite’ members at the core of most societies:

“Politicians are all dismissed as incompetent members of a swamp that needs to be drained.

“The members of the press, you, have been demeaned as purveyors of ‘fake news’ and business leaders have been reduced to unethical, self-serving members of the ‘Davos class’.

“As this disruption endangers our social and political stability, those who have been so caricatured need to stand up and push back.

“As a business leader, I firmly believe that one of the keys to reversing the social unravelling is to ensure economic growth and social opportunity - a goal that can be provided by a strong business sector, supported by sound economic policy.

“Sometimes, I wonder if we realise how fortunate we are in Australia.”

Mr Goyder said Wesfarmers was a farmer’s co-op founded in 1914 with three staff and a budget of £1000 but listed on the ASX in 1984 with a market capitalisation of $84m.

He said $1000 invested in Wesfarmers shares in 1984, with dividends and capital returns re-invested would now be worth $303,000 compared to $29,000 if invested in the all ordinaries.

“We are a diversified conglomerate with excellent assets in every part of Australia, NZ and now in the UK, have got and have had an outstanding board, and an operating model that allows people to get on with things,” he said.

“I succeeded Michael Chaney, who had been CEO for 13 years and presided over growth from a market cap of $1billion in 1992 to over $11b in 2004.

“Sales have grown over 700% from just over $8b back in 2005 to $68.4b last year…and profit has more than quadrupled over the same period, growing from just over $700m in 2005 to nearly $2.9b last year.

“We now employ more than 223,000 people and pay them close to $9bn, a year, in wages and salaries.

“We have returned over $23b to our shareholders in dividends and capital returns over the past 12/13 years, important income to our shareholders.

“We are a top 10 tax payer - $2.1bn last year.” while defending his giant company’s involvement in selling $1 per litre milk.

Mr Goyder addressed the vexed issue, that’s upset the dairy sector but he says is welcomed by consumers, during his address at the National Press Club in Canberra this week where he used it as an example to say excessive or needless political interference in retail activities, was restricting economic growth that also performed social good.

“Whenever we have a problem we seem to regulate our way through the problem rather than letting things fail, or dealing with problems through the organisation,” he said.

Mr Goyder said up to five inquiries had occurred into the price of milk but that wasn’t the solution.

“What the dairy industry in this country needs is world class infrastructure to get its product to markets – it doesn't need the Senate to inquire into that,” he said in reference to multiple inquiries conducted by the federal Senate and other agencies into retailers selling milk for $1 per litre milk which started in early 2011.

Mr Goyder said Coles - of which Wesfarmers is the parent company - had also paid milk processors more for their product; an assumption that they’d they passed that potential profit back to dairy farmer suppliers.

He said Coles and Woolworths weren’t the only retailers in focus for the strategy described by its critics as “unsustainable” with Aldi selling three litre milk products at $2.99 while Costco sells it for $2.85.

Mr Goyder said retail food customers on an average family budget of $152 per week, involving two adults and two children, living in major capital cities like Sydney and Melbourne, welcomed the savings on milk.

“The price of milk actually matters to the people we’re servicing, which is millions of ordinary Australians,” he said.

Mr Goyder said if consumers were asked to pay $1 per litre for milk, or $1.20 knowing the additional 20 cents was returned to dairy farmers, 100 per cent of them would purchase the more expensive product.

But he said at the supermarket, they still buy the $1 per litre milk items.

That’s despite Barnaby Joyce and others offering criticism for retailers selling bottled water for higher prices than milk.

Mr Goyder said he had “no issue” with the $1 per litre milk sales strategy and warned there were other “speed bumps” that slowed economic growth and effectiveness, like political inquiries.

“For some reason in Australia, we have put more speed humps in the way of big business,” he said.

“I cannot understand why a job in Coles in any less valuable than that of a corner store.

“Indeed, we have to live by all the rules and regulations with regards to safety, ethical sourcing, and the like, so why are we penalised with higher tax rates?

“On average Coles engages with about 100 regulators nationally which requires them to manage more than 230 regulator contacts each and every month.”

Mr Goyder was appointed Wesfarmers Managing Director in 2005.

His address also referred to the impact of “fake news” and “incompetent” politicians, or “populist politics” on the quality of life in Australia and economic activity.

“We now live in a world where growing income disparity and social insecurity is being exploited by identity politics and fed by instant communications and short termism,” he said.

“The resulting populist political push is challenging many aspects of capitalism while promoting a view that nationalism, closed-border isolationism and re-regulation offer solutions to the growing economic and social concerns being felt by people worldwide.

“As part of this process, the populist agenda challenges the ‘elite’ members at the core of most societies:

“Politicians are all dismissed as incompetent members of a swamp that needs to be drained.

“The members of the press, you, have been demeaned as purveyors of ‘fake news’ and business leaders have been reduced to unethical, self-serving members of the ‘Davos class’.

“As this disruption endangers our social and political stability, those who have been so caricatured need to stand up and push back.

“As a business leader, I firmly believe that one of the keys to reversing the social unravelling is to ensure economic growth and social opportunity - a goal that can be provided by a strong business sector, supported by sound economic policy.

“Sometimes, I wonder if we realise how fortunate we are in Australia.”

Mr Goyder said Wesfarmers was a farmer’s co-op founded in 1914 with three staff and a budget of £1000 but listed on the ASX in 1984 with a market capitalisation of $84m.

He said $1000 invested in Wesfarmers shares in 1984, with dividends and capital returns re-invested would now be worth $303,000 compared to $29,000 if invested in the all ordinaries.

“We are a diversified conglomerate with excellent assets in every part of Australia, NZ and now in the UK, have got and have had an outstanding board, and an operating model that allows people to get on with things,” he said.

“I succeeded Michael Chaney, who had been CEO for 13 years and presided over growth from a market cap of $1billion in 1992 to over $11b in 2004.

“Sales have grown over 700% from just over $8b back in 2005 to $68.4b last year…and profit has more than quadrupled over the same period, growing from just over $700m in 2005 to nearly $2.9b last year.

“We now employ more than 223,000 people and pay them close to $9bn, a year, in wages and salaries.

“We have returned over $23b to our shareholders in dividends and capital returns over the past 12/13 years, important income to our shareholders.

“We are a top 10 tax payer - $2.1bn last year.”

FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media

POST A COMMENT


Screen name *
Email address *
Remember me?
Comment *
 
Sorghum and maize can each play a part in providing home-grown feed on dairy farms but farmers need to carefully prepare and follow a plan to obtain the most value from these crops.16 Oct 17 Sorghum and maize can each play a part in providing home-grown feed on dairy farms but farmers need to carefully...
Several new additions to the baled silage marketplace will reduce bale spoilage and the number of decomposing bales that can leak effluent into the soil and water tables close to the ground surface. 
27 Sep 17 Several new additions to the baled silage marketplace will reduce bale spoilage and the number of decomposing bales...
light grey arrow
Dear , Our silage films also can reach 55% stretch, would you like to test ? it's also very
light grey arrow
Aus lucerne export to China. how about Aust. dairy farmers? Them don't need any lucerne.Do they?
light grey arrow
The Seralini study showing long term ingestion of GE corn is dangerous to health. This study was
Dairyfarmers are reminded that chemicals used on farms, including those used to clean and sanitise the plant and milk vats, must be registered with the Australian Pesticides and Veterinary Medicines Authority (APVMA).
20 Sep 17 Dairyfarmers are reminded that chemicals used on farms, including those used to clean and sanitise the plant and...
When Victorian dairyfarmer Lauren Finger's father said he had an idea, little did she know how much of an impact his invention would improve her on-farm productivity and safety.
05 Sep 17 When Victorian dairyfarmer Lauren Finger's father said he had an idea, little did she know how much of an impact his...
Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition opportunities.25 Sep 16 Australian farm chemical manufacturer Nufarm has repaired its balance sheet and is now hunting for acquisition...
Monopoly market may confront cropping sector under mega-merger proposal.22 Sep 16 Monopoly market may confront cropping sector under mega-merger proposal.