How Do Woolworths' And Coles' Milk Levies For Dairy Farmers Stack Up?

A 10-cent-a-litre increase on selected home brand milk is "a start but nowhere near enough" for our dairy farmers, advocates say.

Coles and Woolworths have backed calls to increase the price of milk in supermarkets by 10 cents a litre as the nation's dairy farmers move through crippling drought.

But dairy advocates, and the farmers themselves, have quickly pointed out a there's a catch.

"It's a start but it's not nearly enough," Sarah Ferguson, from the Queensland Dairyfarmers Organisation (QDO), told ten daily.

Earlier this month, the QDO released a petition calling on the supermarkets to increase the retail price of all milk, and for processors to return that money to farmers. It was an attempt to do things differently, and was met with huge public support.

“We have been trying hard to do things in a traditional way by negotiating with supermarkets and processors to influence this discounted milk market. But it hasn’t worked. Nothing has changed,” Ferguson told ten daily at the time.

READ MORE: Milk Levy For Dairy Farmers Could Go Ahead As A 'Temporary Measure' 

She said she was aware of conversations between the supermarkets and processors, but that the announcement from Woolies -- quickly followed by Coles -- on Thursday was "quite a surprise".

Coles will increase the price of its three-litre branded milk from $3 to $3.30 until the end of the year. Woolies will do the same in Queensland, New South Wales, Victoria and the ACT until mid-October when it introduces a temporary range of 'Drought Relief' milk at $1.10 a litre for two and three litres.

"Even the fact that Woolworths is calling this 'drought relief' milk is concerning, and it reeks of a marketing ploy," Ferguson said.

She said Coles' Christmas limit to the levy was a sign of little acknowledgement or understanding of the current state of the sector.

"We won't be out of drought by then. The fact is our farmers need the time to get back on their feet," she said.

"They are trying to keep this as a temporary fix and they don't want to lose their dollar-a-litre positioning. It's not enough to break the back of this."

Both retailers have confirmed 100 percent of the increase in price will be returned to farmers. Woolworths detailed this will go through its supplier, Parmalat, which will then distribute it on a monthly basis among the farmers it works with.

Dairy farmers are hit the hardest during drought. Image: Emma Brancatisano

Federal Agricultural Minister David Littleproud said he'd been assured the money would reach the farm gate.

"I'm going to hold them to account, don't worry," he told ABC radio, but stopped short of offering specific details around the distribution of the levy.

"There's still more to be done, I'm not running away from it, but it's a good first step."

The QDO is calling on the levy to be applied to all sizes and brands across all states to even partially relieve spiralling feed costs and a long de-valued price for farmers' milk.

"Farmers are concerned because this isn't being applied across the board. They feel a little bit ripped off," she said.

But she recognised the supermarkets were in part listening.

"When we started this, we were mindful of the fact that asking for too much too soon has failed in the past. We know that for a sustainable industry, we need more than 10 cents per litre. But it's baby steps," she said.

"Our message is we need to keep the pressure on. We need to steer clear of dollar-a-litre milk until we see this levy on all brands and all sizes in all states until the drought is over."