Milk drought levy ‘a good start’
AUSTRALIA’S dairy lobby has asked for more clarity around how a 10 cent a litre drought levy on fresh supermarket milk sales would come back to the farmgate and benefit all dairy farmers.
AUSTRALIA’S dairy lobby wants more clarity on how a 10c-a-litre drought levy on fresh supermarket milk sales will get back to dairy farmers.
Last week, Woolworths announced it would introduce a new range of milk next month which includes a 10 cent a litre levy to support dairy farmers in drought, until then it has increased the price of its three-litre house brand milk.
Coles and milk processor Lion Dairy & Drinks followed.
Australian Dairy Farmers said the move was a good start but said the extra 10c must be distributed to all dairy farmers
Fresh white milk sold through supermarkets makes up about 14 per cent of Australia’s total milk production, according to Dairy Australia figures.
Federal Agriculture Minister David Littleproud applauded Woolworths.
Woolworths’ decision followed a stark warning to dairy processors from the Australian Competition and Consumer Commission not to blame $1 a litre housebrand milk for their inability to lift farmgate milk prices.
The competition watchdog was contacted by farmers who had been told this by processors and the ACCC said this was misleading. But a key finding from the ACCC dairy inquiry released in April was that almost all contracts for the supply of private label milk allow processors to pass-through movements in farm gate prices to supermarkets. ACCC chair Rod Sims said dairy processors where blaming $1 a litre milk for their inability to pass-on price rises to suppliers rather than cut their margins on branded milk sales.
Australian Dairy Products Federation executive director Peter Stahle had not received feedback from either farmers or processors saying $1 a litre milk was the reason why more money could not be paid to farmers and would be “surprised if a company took that position”.
“I’m surprised by the comment by the ACCC in the context of the second highest prices paid for milk currently,” he said.
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