The supermarket conglomerate will continue to use its dairy processor to distribute the extra money to each farmer who produced the milk, paying extra for each litre that farmers produced.
Previously known as a drought levy, farmers could be payed as much of the 10 cents per litre levy as possible, given administration costs.
Federal Minister for Agriculture David Littleproud has welcomed the news Woolworths will effectively cease sales of $1 milk, but says there is still much more to be done.
‘‘The $1 milk disaster began on January 1, 2011, and I hope today is the beginning of its end,’’ Mr Littleproud said.
‘‘Whilst I wish Woolworths was taking a much bigger step, they’re miles head of their competitors.
‘‘Coles and Aldi continue to sell milk at $1.
‘‘This drives down prices to farmers. Supermarkets can’t pretend selling milk cheap doesn’t hurt farmers and they’ve got to be called out on this rubbish.’’
Mr Littleproud stressed the importance of supermarkets paying a fair price for all dairy products, not just milk.
He also encouraged consumers to choose branded items when shopping and to consider switching supermarkets away from Coles and Aldi.
Referencing the Australian Competition and Consumer Commission report into the dairy industry, Mr Littleproud emphasised issues in which supermarkets use their market power to drive down how much they pay processors, and processors then use their bargaining power to drive down what they in turn pay farmers.
‘‘There were around 7500 dairy farmers in 2010 and now there are just under 6000 as the industry has consolidated,’’ he said.
‘‘Farmers have effectively not had a pay rise in a decade while the cost of feed and other inputs have gone through the roof.
‘‘Australian Dairy Farmers has asked me to deliver a mandatory code of conduct for the industry and I’m doing that right now, but the supermarkets need to stop charging an idiotic price for milk.’’
13°C