Woolworths announced its milk drought levy will end in June following strong back-to-back seasons in the dairy sector.
Woolworths announced its milk drought levy will end in June following strong back-to-back seasons in the dairy sector.
The retailer will also remove drought levy labelling on milk products in March, however the retail price will remain the same until the end of the financial year.
Tim Cochrane welcomed the move and said the supermarket giant will still pay the same amount for milk produced on farms and is a “win” for farmers as its provided financial security.
“Lactalis (dairy company who Mr Cochrane supplies) said Woolworths is guaranteed to keep paying the same for milk on farm, and that money will roll into our base milk price, which is a good outcome for farmers and a good outcome for Lactalis,” said Tim Cochrane.
“With dropping the drought levy and labelling on the bottles, it opens the door for it to be put back on in the future.”
Woolworths was the first to introduce the levy in 2018 following pressure from farmers amid a crippling drought.
The supermarket’s commercial director of dairy Jason McQuaid said the announcement was made after record rainfall.
“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,” Mr McQuaid said.
“We will continue to pay the same amount to our milk suppliers over the coming months, with farmers receiving an additional 10 cents for every litre of selected Woolworths milk sold until the end of June.”
Mr Cochrane, who was “ironically filling out flood support documents” while speaking to the South Coast Register, said the drought levy served its purpose.
“It seems to go from one extreme to the other,” he said.
“The drought was not ideal situation to be in and the continuation of that support money for this amount of time has given a lot of farmers time to recover from the drought and the pricing associated with that.”
Mr Cochrane said he thinks the days of $1 a litre milk are dead and gone, as the relationship between the dairy industry and big retailers had improved in the past few years, but didn’t rule it out as impossible.
“It can happen, but I don’t think it will,” he said. “It’s not possible to have fresh drinking milk on the shelves for $1 a litre.
“The cost for everyone with inflation has gone up beyond that point.”
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