Supermarkets Coles, Aldi to raise milk prices by 10 pct in Australia

SYDNEY, March 19 (Reuters) - Supermarket chains Coles Ltd and Germany’s Aldi said on Tuesday prices of home-branded milk sold at their Australian stores would rise by 10 percent from Wednesday, in a push to help farmers impacted by extreme drought.

The price increases by two of the largest supermarket chains in the country come after a similar move by peer Woolworths Group earlier this year, and follows pressure from government officials as the country is impacted by catastrophic drought.

From March 20, 2-litre and 3-litre home-branded milk sold by the retailers will rise by 10 cents per litre, with the proceeds expected to go directly to the farmers, the retailers said in separate statements.

The decision ends several years of one-dollar-a-litre milk sold by the major supermarket chains, which sell over half of Australia’s total domestic drinking milk. Government officials had publicly criticised the pair for keeping milk prices low in order to attract shoppers to their stores.

“We know that this small price increase isn’t a silver bullet but it’s a good start and I congratulate Coles and Aldi on this important first step,” Nial Blair, the New South Wales state minister for primary industries, said in a statement.

The German discount retailer’s decision is in recognition of the significant issues impacting farmers and “the fact that broader government-led policy reform is unlikely to occur in the short-term,” Oliver Bongardt, Managing Director of Buying, ALDI Australia, said in a statement.

“This solution is a short-term measure and will allow our processors to immediately pass additional funds to their dairy farmers outside of normal seasonal adjustments.”

Australia suffered its third warmest year on record in 2018, marked by the worst drought in living memory that has already cut total gross domestic product (GDP) by 0.15 percent.

Reporting by Paulina Duran; Editing by Shreejay Sinha