News: Coles to defend milk wars to Senate

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Wesfarmers Ltd (ASX:WES) owned Coles has revealed that it will appear before a Senate inquiry into milk discounting, amid calls to broaden the enquiry to include the pricing of eggs, bread, pork and beef.



The supermarket chain has been facing mounting criticism from dairy farmers who claim heavy discounting is putting strain on the industry and driving them out of business.



In January Coles cut the price of its home brand milk to $1 a litre, a move that was quickly matched by rival supermarkets. 



Coles has defended the action, claiming the farm gate price is rising because global demand for milk product is rising, and, that it has no direct influence of these prices because it buys milk from processing companies, not from dairy farmers.



Coles also advises that it has reduced its own profit margin on milk sales so that it can provide a benefit to its customers.



The Senate inquiry began today and Coles is due to make a submission and appear before the committee on March 22, 2011.



In the first six months of the 2011 financial year, Wesfarmers booked a net profit of $1.2 billion.