Below-cost milk linked to wage theft
DAIRY farmers being paid less than the cost of production for their milk has been compared to wage theft, as supermarkets faced a grilling in a heated Senate hearing last night.
Supermarkets pointed the finger at customers being unwilling or unable to pay more for milk, and argued it was processors', not retailers', responsibility to pay farmers.
It comes as the consumer watchdog convinced Coles to repay dairy farmers $5.25 million after the supermarket giant was alleged to have pocketed most of a 10c per litre "farmers' levy" it charged customers for milk.
Dairy farmers in Queensland have been in crisis, squeezed between increased costs of drought and farmgate milk prices they're paid by the middleman processors.
Queensland senator Susan McDonald urged a Woolworths representative to personally check that their farmers were being paid more than the cost of production so he "could sleep tonight".
"We've had several examples recently of businesses underpaying workers and consumers have been rightly outraged.
"We're now talking about dairy farmers being paid less than the cost of production. I don't think that it's OK that you are saying that you're leaving it with the processor.
"I cannot accept that you think that consumers think that it's OK to buy cheaper milk if it means you're not paying a fair price for the product."
Labor's Glenn Sterle said big supermarkets were "bullies" and it was wrong to suggest they could not influence how much farmers were paid.
"The squeeze comes from the top of the supply chain," he said.
Woolworths spokesman Christian Bennett said they were the first supermarket to pass on a full 10c-a-litre drought levy to farmers and that they offered a range of products and prices to reflect their customers needs.
"For some it is through the challenge of managing their family budget and that's why they choose products at the cheaper end," she said.
"Others are prepared to pay a much more expensive price because that fits their particular consumer outlook."
Coles spokeswoman Vittoria Bon said there had been a drop off in the amount of milk bought as prices went up.
"It is for the customers to decide which milk they want, what price they can afford and are prepared to pay," she said.
Woolworths, Coles and Aldi all strongly backed the Australian Competition and Consumer Commission recommendations from 19 months ago to develop a dairy code of conduct to give farmers more protections in negotiations with processors.
Meanwhile, the ACCC found that Coles had paid Norco farmers just 3.5 cents a litre, instead of the full 10 cents, having negotiated an "unrelated'' increase in payments to Norco farmers of 6.5 cents per litre from April 1.
It convinced Coles to cough up $5.25 million to Norco farmers in southern Queensland and northern NSW, after threatening to take the supermarket to court.
ACCC chairman Rod Sims yesterday blasted Coles' "extremely bad behaviour''.