Are dairy farmers receiving just 1.4 cents from a 10 cent per litre milk levy by the major supermarkets?

By William Ton, James Lane and Peter Trute

The Statement

“Coles and Woolies, they said look we’ll put 10 cents a litre on for the milk and we’ll give it to the dairy farmers. Well I’ve just found out that the dairy farmers get 1.4 cents of that."

One Nation leader Pauline Hanson. October 10, 2019.

The Analysis

One Nation leader and Senator for Queensland Pauline Hanson has called for the dairy industry to be re-regulated after learning of the struggles faced by the dairy farmers. [1]

Senator Hanson told Sky News’ The Kenny Report farmers were getting short-changed by Coles and Woolworths - only receiving an additional 1.4 cents per litre of milk from a 10 cent increase announced earlier in the year to assist drought-affected farmers. [1]

Woolworths and Coles supermarkets increased the price of their own-brand milk by 10 cents per litre in February and March in 2019, respectively, and vowed to pass on the increase to struggling dairy farmers. [2] [3]

AAP FactCheck examined Senator Hanson’s claim that dairy farmers were only getting 1.4 cents from the 10 cent increase by the supermarkets for every litre of milk.

Senator Hanson’s office told AAP FactCheck the source of her 1.4 cent figure came from an interview Queensland dairy farmer Scott Priebbenow did with radio and TV host Alan Jones on Sky News on October 9, 2019. [4]

Mr Priebbenow spoke about his struggles on the farm, telling Mr Jones he has only received an additional 1.4 cents from the 10 cent per litre increase announced by the supermarkets in early 2019. [4]

Mr Priebbenow confirmed the 1.4 cents figure to AAP FactCheck and said that it related to a 10 cents per litre price increase by Coles in March 2019. He said Coles again raised the milk price by 10c per litre in July but that he had “received none of that 10 cents - it just went into (Coles’) pocket”.

Just over a quarter of all milk produced in Australia (27 per cent) is consumed as fresh drinking milk, according to figures from dairy industry services body Dairy Australia. The rest goes to products such as cheese, butter and milk powder. [5]

A Coles spokesperson told AAP FactCheck that when farmers supply milk to a processor, only a small proportion of that milk goes into Coles brand milk, which represents 3.5 per cent of total national milk production.

The spokesperson said Coles’ levy applies to Coles brand two-litre and three-litre fresh drinking milk but not on all dairy products, such as cheese or yoghurt, that may also be produced with the milk.

When farmers are paid by their milk processor, the amount received for the portion of milk sold as own-brand is spread across the entire volume of milk they have supplied, resulting in the payment being diluted.

A Woolworths spokesperson told AAP FactCheck regarding the milk levy rise: “The commitment that Woolworths made back in February was that all of the money raised through the (10 cent) levy went to dairy farmers in full and that indeed happened. That is subject to independent auditing to make sure the money that we send goes out to the dairy farmers.”

The spokesperson explained the amount dairy farmers received from Woolworths brand milk varied “depending on the relationship with the processor and how much of your volume goes into Woolworths milk”.

A spokesperson from the Queensland Dairyfarmers’ Organisation, which represents dairy farmers across Queensland, told AAP FactCheck farmers across the state received a proportion of the supermarkets’ 10-cent levy based on the proportion of their milk going into the supermarkets’ own-brand milk. The levy is not paid for milk sold under retail labels. [6]

“Farmers in Queensland receive between zero and five cents per litre increase in their farm price which reflects that 0 and 50% of their milk respectively goes into retail-branded bottles,” the spokesperson said.

AAP Factcheck found that Senator Hanson’s statement was accurate based on the evidence of one Queensland dairy farmer. However, it cannot be verified that all dairy farmers were receiving the same amount the One Nation leader claimed. It is the case that farmers only receive the 10-cent levy on the milk sold as supermarkets' own-brand product.

The Verdict

  • Mostly True – Mostly accurate, but there is a minor error or problem.

The References

1: ‘Supermarkets under fire as milk price increases fail to reach farmers’. The Kenny Report, Sky News. October 10, 2019: https://www.skynews.com.au/details/_6093586806001

2: ‘Australian dairy farmers have now received an extra $10m from Woolworths sustainable dairy initiatives’. Woolworths. April 16, 2019: https://www.woolworthsgroup.com.au/page/media/Press_Releases/australian-dairy-farmers-have-now-received-an-extra-10m-from-woolworths-sustainable-dairy-initiatives/

3: ‘Farmers to receive full benefit of Coles milk price increase’. Coles. March 19, 2019: https://www.colesgroup.com.au/media-releases/?page=farmers-to-receive-full-benefit-of-coles-milk-price-increase

4: ‘Dairy farmer’s emotional message after selling the last of his cows’. The Alan Jones Breakfast Show, 2GB. October 9, 2019: https://www.2gb.com/dairy-farmers-emotional-message-after-selling-the-last-of-his-cows/

5: ‘Australian Dairy Industry In Focus 2018’, Dairy Australia. https://www.dairyaustralia.com.au/publications/australian-dairy-industry-in-focus-2018?id=B81A5CE26AAE4C0F898E8F3BFF0014D9

6: ’About QDO’. Queensland Dairyfarmers’ Organisation. 2019: http://www.dairypage.com.au/about-qdo

First published October 14, 2019 17:03 AEST