Coles to pay dairy farmers $5.25m amid ACCC allegations about milk price rise

Retail giant Coles will pay millions to the nation’s struggling dairy farmers after being accused of misleading consumers over a price rise on supermarket-branded milk.

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Retail giant Coles will pay $5.25 million to the nation’s struggling dairy farmers after being accused of misleading consumers by stating it would pass on its price rise on supermarket-branded milk.

The payments follow an investigation by the Australian Competition and Consumer Commission into whether Coles fully passed on to Norco Co-operative Limited dairy farmers a 10 per cents per litre price rise it charged consumers.

Coles had indicated that it would pass on the milk price rise to drought-stricken dairy farmers. Picture: Jeremy Piper

The consumer watchdog had been investigating allegations that, in a media release, social media posts and in-store signage, Coles had indicated that the full benefit of the price increase of its Coles branded two-litre and three-litre milk, announced last March, would be passed on to drought-stricken farmers.

Coles has now committed in writing to the ACCC that it will pay an additional 7 cents per litre for two-litre and three-litre Coles branded fresh milk, which amounts to around $5.25 million, to Norco for milk supplied between April 1, 2019 and June 30, 2020, resolving the ACCC’s investigation.

Norco dairy farmers will receive their payments within seven days. Picture: Nathan Edwards

ACCC Chair Rod Sims said the majority of the money would be paid to Norco farmers in Queensland and NSW within a week.

“We were fully prepared to take Coles to court over what we believe was an egregious breach of the Australian Consumer Law,” he said.

“We believe we had a strong case to allege misleading conduct by Coles.

“Accepting this commitment means that farmers will receive additional payments from Coles, with the majority of the money to be paid to Norco within seven days.

“Court action would also have taken many months if not years, with no guarantee that any money would have been paid to farmers as a result,” Mr Sims said.

ACCC Chairman Rod Sims says Coles allowed farmers, consumers and the Australian public to believe that its price rise would go straight into the pockets of dairy farmers.

Coles’ statements included: “An extra 10 cents per litre to Australian Dairy Farmers”, and, “Coles will pass the extra 10c per litre to processors who will distribute all of the money to the farmers who supply them with milk for Coles Brand”.

“Coles allowed farmers, consumers and the Australian public to believe that its 10 cent per litre price rise would go straight into the pockets of dairy farmers, when the ACCC alleges this was not the case for Norco farmers,” Mr Sims said.

“We are pleased that Norco farmers will now receive additional money, commencing within seven days.

“We take commitments made to us very seriously. The ACCC will be keeping a very close eye on Coles to ensure they follow through on this commitment, and we are not ruling out future litigation if necessary,” Mr Sims said.