Dairy farmers have hit out after processor Harvey Fresh ruled out passing on a wholesale milk price rise announced yesterday by Coles.
The supermarket said, "WA dairy farmers supplying Harvey Fresh will get a higher farm gate price for fresh milk supplied to Coles."
Harvey Fresh immediately contradicted Coles, saying it had increased farm gate prices on January 1 in anticipation of Coles' wholesale price rise.
The embarrassing clash comes as Harvey Fresh, Brownes and Lion battle to secure milk supplies.
Coles merchandise director John Durkan said the supermarket would increase payments to Harvey Fresh by 2.7ï¿½ a litre for its branded and private label milk.
"The Coles price increase will allow Harvey Fresh to pay higher farm gate prices to its 70-plus milk producers in WA," Mr Durkan said.
"Coles has now increased the price it pays to Harvey Fresh by 6Â¢ a litre in the last nine months."
Harvey Fresh director Kevin Sorgiovanni said the price rise had been initiated by Harvey Fresh in talks with Coles late last year.
"Coles' positive response to our application to lift wholesale prices provided the confidence to increase farm gate prices from January 1, even though we hadn't agreed on a formal change to the milk supply contract at the time," Mr Sorgiovanni said. "We're pleased, and relieved, we have been able to formalise those contract negotiations."
Coles, which has been blamed for devastating the industry through its $1-a-litre milk promise, said the rise came after talks with WAFarmers president Dale Park and dairy section president Phil Depiazzi. Mr Depiazzi said he would be very disappointed if Harvey Fresh did not pass on at least some of the rise announced yesterday.