WOW to phase out drought levy

by | Feb 9, 2022 | Australia, Prices

Woolworths has announced it is phasing out its 10c milk drought levy for dairy farmers by mid-year due to easing drought conditions and rising milk prices. Farmers were advised of the change through Fonterra, Lactalis and Bega with Woolworths scrapping the levy on its own-brand 2l and 3l fresh milk by the end of June. After four years, Woolworths commercial director of dairy Jason McQuaid said it was time to end the drought relief initiative as seasonal conditions had improved. He said record rainfall because of La Niña and rising farmgate milk prices meant the retailer had reached an important turning point. McQuaid stressed that the dairy industry could face extreme conditions again but said the industry was able to produce more timely support for farmers through existing milk purchase arrangements. 

Despite the levy being a temporary measure, dairy advocacy groups expressed disappointment at the withdrawal of support with eastAUSmilk co-chief executive Shaughn Morgan pointing out there are still unresolved issues to be addressed in the industry “including market failure caused by bargaining power imbalances in the supply chain”.