Woolworths to remove dairy farmers’ 10c milk drought levy
- Replies 35
The new milk year in Australia begins in July, which means the price of milk will be subject to negotiations between retailers and processors.
However, farmers were disappointed at the recent news that Woolworths will be phasing out its milk drought levy by the end of June. Meaning, the supermarket giant will no longer pay dairy farmers a rate of 10 cents per litre.
Woolworths would no longer pay dairy farmers the additional 10 cents per litre of milk, starting July. Credit: Gloucester Advocate.
During the height of the drought in 2018, Woolworths introduced the milk drought levy to support dairy farmers who have been affected by the disaster.
And now, the supermarket giant’s recent decision to scrap the levy was said to be made because the drought conditions were reported to be easing up this year.
“As La Nina has delivered record rainfall and farmgate milk prices continue to climb, we've reached an important turning point and will be phasing out the drought levy ahead of the new milk year,” said Woolworths commercial director of dairy Jason McQuaid.
Mr McQuaid also assured that farmers will continue to receive the additional 10 cents for every litre of selected Woolworths milk sold until the arrangement ends at the end of June.
David Inall, chief executive of Australian Dairy Farmers, said that the dairy industry had always known the levy was only a temporary measure to help farmers get through the drought.
“Now that the drought is behind us for most farmers, it is accepted and understood that the levy would be dropped,” said Mr Inall.
“Appropriately, they've provided five months' notice, which is prudent and appreciated,” he added, thanking Woolworths for the consideration.
The move to phase out the milk drought levy has disappointed dairy farmers nationwide. Credit: news.com.au.
However, not everyone in the dairy industry feels the same sentiments.
Some farmers voiced out their concerns that they were disappointed the levy isn’t being rolled into the base price for milk.
NSW Farmers dairy committee chair Colin Thompson said that while he was grateful for the initiative from supermarkets, dairy farmers aren’t getting the proper price for their milk’s worth.
“The irrational dollar-a-litre pricing model nearly killed the dairy industry, we cannot let that happen ever again,” said Mr Thompson.
“There is a degree of disappointment among dairy farmers that the drought levy was not rolled into the base price,” he added.
“Fair, market-based pricing that recognises the true cost of production is what dairy farmers need for a sustainable future.”
Woolworths milk is currently priced at $1.30 a litre.
So, what does the scrapping of milk drought levy mean for consumers?
This means that for every litre of milk we buy, a part of it will no longer go to dairy farmers starting July.
This move would usually see that milk prices would go down. However, from the looks of it, no changes in the price of milk will be made.
What are your thoughts? Let us know in the comments below!