Woolworths will extend its dairy levy support for 12 months and introduce a new $5m fund to help with on-farm efficiency, the company says.
Woolworths’ existing dairy contribution payments on two- and three-litre fresh own brand milk varieties will be extended until June 2021.
The company introduced the 10 cent per litre levy in 2018 and said it had contributed about $50 million to dairy farmers. It expects an extra $30 million will be paid during the extension.
Woolworths director of fresh food Paul Harker said: “Our levy has provided much-needed relief to dairy farmers and we’re grateful for our customers’ support of the program.
“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.”
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.
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 1 June, 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.
Harker 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.”
Woolworths purchases milk directly from around 20 dairy farmers for its Farmers’ Own range and has published its agreements in line with the requirements of the code.
“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,” Harker said.
Woolworths will also establish a $5 million 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.
