Coles' move to pay more for milk was too little, too late for third-generation Dardanup farmer John Giumelli who sold his 120-strong herd last week.

Mr Giumelli was one of just 150 dairy farmers left in WA - down from about 400 in 2000 - until he decided to end operations on the 100-year-old family dairy farm.

Major processer Harvey Fresh said yesterday it would increase farmgate milk prices after Coles agreed last Tuesday to pay it an extra 3.3¢/litre for milk - an additional $3 million investment in the industry.

But Mr Giumelli said the real price increases would probably be minimal for farmers.

Farmers get about 41¢/l for their milk but he said they were receiving 48¢/l before industry deregulation in 2000.

Mr Giumelli said the real cost of production was now about 80¢/l compared with about 48¢/l in 1998.

"That 3.3¢ which Coles have given begrudgingly probably only accounts for half of the milk Harvey Fresh are buying off farmers," he said. "If farmers get 1.5¢, I'd be surprised."

Mr Giumelli, who is almost 65, said he was selling up and moving into beef because he was concerned there was little future left in dairying.

"I'm not optimistic for the future at all and I don't want to be the last man standing," he said.

"At least I can sell my cows to someone.

"The income for milk won't support the easing in of the next generation, which is the formula since when farmers started farming."

But he likened the decision to sell his cows to a death in the family .

"A lot of those cows I've pulled out as calves and I'm friends with them and they're friends with me," he said.

"Emotionally, it's tough."

Mr Giumelli said the supermarket milk wars had provided little incentive for farmers to remain in the industry.

"The supermarkets don't mind if they don't make anything on that milk because it gets people into the shop and so they sell everything else, but it devalues milk, makes it less than water, and devalues dairy farms and dairy farmers," he said.

Harvey Fresh has yet to announce the exact increase to farmgate prices.

Australian Dairy Farmers has said dairy farmers now expect Coles to pass on similar payment increases to processors in the rest of Australia.

It said it proved Coles' $1/litre campaign was unsustainable.

Woolworths has not commented on whether it will increase payments to processors.

It said it already paid a fair price for milk.

The West Australian

Popular videos

Compare & Save

Our Picks

Compare & Save

Follow Us

More from The West