Milk levy plan turns sour

Australia’s Agriculture Minister David Littleproud last week launched a scathing attack on Coles, one of the two main Australian supermarket chains.

He blasted Coles over its handling of the A10c milk levy for drought relief, calling its approach “slippery” and saying the extra money may not even go back to the right farmers.

Littleproud also had harsh words for the German supermarket chain Aldi, which operates about 400 stores in Australia. He says Aldi has refused to apply any levy and has done “bugger all” to help Australian farmers.

Coles and its main rival Woolworths last month announced a milk levy after weeks of intense lobbying by the dairy industry and the public. 

But the two supermarkets chose different systems to redistribute the levy to farmers.

Woolworths is offering customers in Queensland, New South Wales and ACT its in-house brand at A$2.20 for 2L and A$3.30 for 3L. It is passing the extra money to the milk processors, who have agreed to distribute the money to dairy farmers in full.

Coles increased only the price of its 3L milk -- from A$3 to A$3.30. It says that after discussions with the National Farmers Federation (NFF), it has set up the Dairy Drought Relief Fund and farmers can apply for funding.

But Minister Littleproud and dairy farmers are unhappy. Although he wanted to give Coles the benefit of the doubt he has now concluded it is an “empty media stunt”.

“The reality is [the 3L milk] is a very narrow portion of their range that sells,” he says. “[And they’ve compounded this by making] a bureaucracy for getting that A10c/L back to the farmer.” 

Littleproud says a better model is to give the levy funds back to the milk processors who collect the milk from farmers.

“The processors are the ones who actually pick up the milk; they’re the ones who know where the milk comes from,” he says.

He says Coles’ model provides no guarantee the money collected would go to the particular farmers who supplied the milk, or that they would be paid according to the volume of milk they supplied.

“Coles never wanted to make sure farmers got fairer pay, and made a hasty announcement to match their competitor,” he says.

The milk levy has also angered some dairy farmer organisations: the Queensland Dairy Farmers Organisation is unimpressed, with its president Brian Tessmann saying Coles’ publicity stunt in putting the A10c levy on a single line of their private-label milk is a slap in the face for farmers. 

“Because they have not put the levy on all brands and all sizes, the amount that would come back would be a fraction of a cent. 

“That’s bad enough, but worse is their announcement that they would deliver the pittance that would be collected back through the NFF as opposed to using the correct protocol which would be to pay it directly to their suppliers Norco and Saputo who would then be able to simply pass it on to members by way of their milk cheque.”