United Dairyfarmers of Victoria Wannon branch president Bruce Knowles said dairy farmers would be happy with the move and hoped supermarket giants Coles and Aldi would follow suit.
The $1 litre fresh milk will be removed from stores and the cost of two and three litre varieties of Woolworths-branded fresh milk increased to $2.20 and $3.30 respectively.
As the change goes national, it will deliver higher milk prices to more than 450 Australian dairy farmers supplying into Woolworths branded fresh milk.
A statement issued by Woolworths said every cent of the increase would end up with Australian dairy farmers.
“I think if Coles and Aldi can do the same thing it will be good for the industry,” Mr Knowles said. “The dollar milk has been a bone of contention and hasn’t gone down well.
“It’s a good move. I think farmers are more interested in getting a fairer return for their efforts and we want to see this being reflected with regard to the sale of their produce in the supermarkets. While fresh milk is one component of it, it’s a move in the right direction.”
Under the model, the extra 10 cents customers pay on each litre is distributed in full to dairy farmers by processors in line with the usual payment cycles, the statement said.
Mr Knowles, a Tyrendarra dairy farmer, said he hoped the increased funds would be returned to farmers but that it would depend on their individual contracts.
He said farmers were struggling to make ends meet across the whole industry. “The bottom line is getting less and less… Whether it’s the price of water up north or the electricity prices, they need to get better payment for their price so they can carry on farming.
“It’s just getting more and more difficult and it’s reflected within the industry now we’re seeing farmers moving away from farming.
“The whole industry needs to have a good look at themselves. Government needs to have a look at the way costs are being impacted on the dairy farmers so at the end of the day we can get a good return,” Mr Knowles said.
Woolworths Group chief executive Brad Banducci said the move followed consultation with industry bodies where they heard that the national outlook would continue to be extremely tough for dairy farmers.
“This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live,” Mr Banducci said. “It’s clear something needs to change and we want to play a constructive role in making this happen.
“While we’re realistic this won’t solve broader structural issues, we hope it will help inject much-needed confidence into the sector and the regional communities dairy farmers do so much to support.”
Mr Banducci said he was aware of the budgetary pressures facing customers and Woolworths would work to offer great value to customers across their total shop. “We believe it’s the right thing to do and a key step in shoring up fresh milk production in Australia.”
Australian Dairy Farmers chief executive David Inall said it was a game changer in the fight against discount dairy that had long frustrated the industry.
“It is reassuring that Woolworths has committed to deliver the full 10 cent increase back to those farmers who supplied the milk into that product category,” Mr Inall said.
“Removing $1 milk is not just intended to restore farmers’ financial confidence, but it will also boost confidence in regional communities and small businesses that rely on the industry.
“Consumers can buy fresh milk from Woolworths knowing they are supporting the Australian farmers who supplied it.”
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