Woolworths extends dairy levy support for 12 months

Camera IconCredit: Sandra Mu/Getty

Woolworths will extend its existing dairy contribution payments on two and three litre fresh own brand milk varieties until June 2021.

The 10¢ per litre levy has contributed about $50 million to dairy farmers since Woolworths first introduced the initiative in 2018.

Based on current volumes, these support payments are expected to contribute an extra $30m to dairy farmers over the next 12 months.

The move to extend the support will provide certainty to more than 450 dairy farmers supplying milk used in the production of Woolworths branded milk as the Federal Government’s Mandatory Code of Conduct comes into full effect and drives change in the industry.

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Woolworths will also establish a $5m fund to provide infrastructure and technology grants to dairy farmers to help improve on-farm efficiency and profitability over the next three years.

Woolworths is engaging with dairy industry stakeholders on the design of the program and expects to open for applications later this year.

Woolworths fresh food director Paul Harker said he was grateful for customers’ support of the program, which “provided much-needed relief to dairy farmers”.

“While conditions have improved and farmgate prices have gone up since we started the levy in 2018, we’re extending payments to provide certainty while dairy farmers and processors find their feet under the new mandatory code,” he said.

“This is set to return tens of millions to dairy farmers over the next 12 months above and beyond the farmgate price they’re paid by their processors.

“To build on our existing support, we’re also working to establish a dairy fund to offer financial grants for dairy farmers to invest in new infrastructure or technology to improve profitability.”

The Federal Government’s Mandatory Code of Conduct was one of the ACCC’s key recommendations following its inquiry into the dairy industry in 2018.

It has been introduced to address what the ACCC determined was an imbalance in bargaining power between dairy processors and farmers.

From today, processors are required to publish their standard form milk supply agreements to cover all the circumstances in which they intend to purchase milk in the coming financial year.

Woolworths purchases milk directly from about 20 dairy farmers for its Farmers’ Own range and will today publish its agreements in line with the requirements of the code.

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