Coles has signed a supply agreement with farmer-owned dairy processors Devondale and Norco to help cover Coles Brand milk supply in NSW, south east Queensland and Victoria.

The Devondale agreement is for ten years and the Norco one for five. Both will come into effect in mid-2014 when Coles’ contracts with existing dairy processors in these areas expire. Arrangements in Western Australia, South Australia, Tasmania and Far North Queensland remain the same.

According to Coles, the new contract is a win for farmers as it takes out the middle man and farmers will get the bigger share of the retail price.

Meanwhile Coles will be able to sustain affordable milk prices for its customers.

“Our customers want fresh Australian milk for their families and they want to know that the price will remain affordable in the future. Our job is to provide a quality product at a competitive price and at the same time ensure that the dairy industry supplying Coles is strong, innovative and customer focused. These new contracts with Australian farmer-owned businesses deliver on all these fronts,” said John Durkan, Coles merchandise director.