Woolworths’ drought levy fund goes to just a handful of farmers

WOOLWORTHS is slapping a drought levy on Victorian milk to support mainly Queensland and NSW Parmalat suppliers, excluding hundreds more drought-affected dairy farmers across southern Australia.
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Fonterra has told The Weekly Times it is supplying Victorian milk to Woolworths, which is then being levied at 10 cents a litre and the proceeds handed to dairy processor Parmalat.
Parmalat is then handing the levied funds to 220 of its NSW and Queensland suppliers, plus 60 of its northern Victoria farmers.
The issue has highlighted just how inequitable the drought levy has become, given Bureau of Meteorology rainfall data shows Australia’s worst hit dairy regions are in southeast NSW, East Gippsland and central Gippsland, where Parmalat has few suppliers.
United Dairyfarmers of Victoria President Adam Jenkins said it was a mistake to call for a drought levy when what the industry needed was for all players in the supply chain to deliver long-term sustainable price increases.
“We shouldn’t have called it a drought levy,” Mr Jenkins said.
“And now we’re on this slippery slope.”
While it was acknowledged that Woolworths was trying to do the “right thing”, Mr Jenkins said the scheme favoured one processor’s small group of suppliers.
“We don’t like Band-Aid solutions and we don’t like drought funding being divisive among a farming group,” he said.
“We’re now in a position where only those with fresh milk contracts with Parmalat get it.”
Coles has rejected handing the levy to its processor suppliers — ­Saputo and NORCO — instead
putting the drought levy into its Coles Dairy Drought Relief Fund, to which all dairy farmers can
apply.
Coles chief operating officer Greg Davis said “after consulting with the National Farmers’ Federation and other industry stakeholders, it was decided that a fair, efficient and direct way for us to distribute money to dairy farmers affected by drought was to set up the Coles Dairy Drought Relief Fund”.
“100 per cent of the funds rais­ed will go to drought-affected dairy farmers,” Mr Davis said.
“We encourage dairy farmers to apply before Nov­ember 30.”
PwC has been appointed as an independent auditor.
Yet Coles has come under fire from federal Agriculture Minister David Littleproud for introducing “a half-baked policy that applies only to Coles’ three-litre variety of their own milk brand and may not even go back to the farmers who supply that tiny portion of drinking milk”.
Woolworths is collecting the levy on its two- and three-litre house-brand milk containers, selling for $2.20 and $3.30 until the end of January.
Australian Dairy Farmers chief executive David Inallsaid the best way to help the industry would be for retailers to stop discounting dairy products.
“You can’t have a situation where a litre of milk is cheaper than a litre of water — it completely devalues the hard work and cost of farmers in producing a quality product,” he said.
“Not all dairy farmers will receive proceeds from these drought initiatives, but all dairy farmers are affected by discounted dairy products, and all dairy farmers are affected in some way by the drought, whether directly or indirectly due to the scarcity and high cost of feed.
“ADF’s position is that all farmers should benefit from a rise in the retail price of milk products.”
The concept of a levy on milk to assist drought-affected farmers was bound to be problematic due to the nature of Australia’s dairy industry.
Most of the country’s milk is produced in Victoria, however only 10.8 per cent of the southern state’s milk is sold domestically as drinking milk, accord­ing to Dairy Australia, while in Queensland all production goes to supermarkets, and 65 per cent in NSW.
A Woolworths spokesman said the chain was focusing its relief effort on drought-affected areas in NSW and Queensland and northern Victoria, “and Paramalat sources Woolworths milk from these regions”.
When asked to confirm that milk produced by Fonterra suppliers in Victoria for its own-brand milk was being levied, with that levy then handed to Parmalat suppliers, he said: “The extra 10 cents a litre on our drought-relief milk range is being distributed to drought-­affected dairy farmers by Parmalat with the oversight of its drought relief committee.”
Mr Jenkins said a short-term solution was not enough.
“We want a long-term solution, everyone thinks this stinks — the very people that introduced the ‘Down, Down’ campaign have shifted value out of the dairy sector, and now they’re being good Sam­aritans” he said, referring to Coles’ low prices strategy that introduced Australians to $1 a litre milk in 2011.
Dairy farmers have faced a cap on supermarket milk prices ever since, while many consumers and political leaders had enjoyed regular pay rises.
An ACCC spokesman said it was important the supermarkets did not mislead shoppers on where the funds were going.
“How Coles and Woolworths choose to distribute proceeds from their respective milk levies is a commercial ­decision for each business to make,” he said.
“However, it’s important that the statements made by each business are not likely to create a false impression about how or to who the funds raised will be distributed.

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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