Woolworths to end 10-cent drought relief levy on own-brand milk
Woolworths drought-relief milk will shortly disappear from its shelves following the easing drought conditions.
Woolworths will remove drought relief labelling from its own-brand two and three-litre milk from March 1, which is supplied by Fonterra, Lactalis and Bega.
But the supermarket giant will continue to collect the 10-cent drought levy on its milk until June 30, which will be passed onto 450-odd dairy farmers still receiving support.
For consumers the price will remain the same at $2.60 for Woolworths own brand 2-litre milk and $3.90 for 3-litre bottles.
Since it was introduction in 2018 the levy has raised $100 million in drought support for dairy farmers.
But as drought conditions have eased Woolworths Dairy Commercial Director Jason McQuaid said farmgate milk prices had lifted by about 15 per cent, prompting the retailer to phase out the special drought levy ahead of the new milk year in July, with a return to regular milk purchasing arrangements.
“In the coming months, we’ll be updating the on-pack label for our 2L and 3L own-brand milk to remove the drought relief banner,” Mr McQuaid said.
“We will continue to pay processors the 10 cents per litre on each of these products until the end of June 2022 and each processor has committed to continue passing those funds through to farmers over this period.”
EastAusMilk co-chief executive Shaughn Morgan said the lobby group would be keeping a close eye on processors to ensure the 10-cent levy continued to be passed through to farmers.
“It’s important dairy farmers are not hurt by this decision, given input costs are soaring,” Mr Morgan said.
Woolworths’ own brand milk accounts for about 5 per cent of Australia’s total milk pool.
In a letter to about 450 dairy farmer recipients of the levy Mr McQuaid said “there will be no immediate change to the total payment you currently receive.
“From the beginning of the new milk year in July 2022, the farmgate price will continue to be reviewed by processors in line with their usual practices.”
“We’re mindful that the industry may again face extreme conditions like those seen in 2018, and have developed a new mechanism to be built into our processing contracts to enable us to provide more timely support for farmers through existing milk purchase arrangements.”