Woolworths Axes $1 Milk In Effort To Help Farmers

Supermarket giant Woolworths will no longer sell milk for $1 per litre, raising prices with the increase to go to struggling dairy farmers.

Woolworths has sold two-litre milk bottles for $2 and three-litre for $3 since 2011. On Tuesday, that will end, as milk prices creep up by 10 cents a litre -- with the increase to go to dairy farmers.

Two-litre bottles will now cost $2.20 at Woolworths, while three-litre varieties will be $3.30. Woolworths had temporarily upped its prices in September, as part of its 'Drought Relief Milk' campaign to assist farmers, and these increases will now be locked in.

"Today is a day filled with joy for the Australia dairy industry," the QLD Dairyfarmers Organisation said.

"This is a war that has crippled the dairy industry for over eight years."

Producers have long complained about the impact of the supermarket's milk pricing, with farmers saying they could barely make a profit.

In September, the Queensland Dairyfarmers Organisation launched a petition calling on major supermarkets to up the retail price by 10 cents, and return the money to farmers.

"We need 10 cents extra per litre to survive, to feed our animals and to feed ourselves," farmer Tony Biffin, who runs a property outside Sydney, told 10 daily at the time.

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

READ MORE: An Extra 10 Cents Per Litre Of Milk Would Help These Farmers Survive

Some farmers told 10 daily they actually lost money by producing milk for large supermarkets.

“In our consultation with industry bodies, including the Australian Dairy Farmers Association, its state members and NSW Dairy Connect, we’ve heard the outlook will continue to be extremely tough for dairy farmers right across the country," said Woolworths Group CEO Brad Banducci.

“It’s clear something needs to change and we want to play a constructive role in making this happen."

The supermarket said the increase would "end up" with Australian dairy farmers, and the change was about helping ensure Australia's dairy industry remained viable.

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

On Monday, Australian Dairy Farmers CEO David Inall called the price reform "a game changer" and said discount prices had "long frustrated" the dairy industry.

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

“It is reassuring that Woolworths has committed to deliver the full 10 cent increase back to those farmers who supplied the milk into that product category," he said.

“Removing $1 milk is not just intended to restore farmers’ financial confidence, but it will also boost confidence in regional communities and small businesses that rely on the industry."

Federal agriculture minister David Littleproud backed the move, and called on other supermarkets to follow suit.

“The $1 milk disaster began on January 1, 2011, and I hope today is the beginning of its end,” he 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."

“All supermarkets should pay a fair price for all dairy – this includes cheese and yoghurt, not just fresh milk, which is a small fraction of the market."

(Image: Getty Images)

Pre-empting possible customer complains about rising prices for a household kitchen staple, Banducci said the supermarket had "not taken this decision lightly."

"We believe it's the right thing to do and a key step in shoring up fresh milk production in Australia," he said.

10 daily has contacted Coles to see if the rival supermarket has similar plans to alter milk prices.

More to come.