Whey to rip off battling farmers

A MAJOR Queensland milk processor is paying dairy farmers less than their production costs despite its farm gate price including payments from the supermarket drought levy.

LNP Senator Susan McDonald said she would refer Lactalis, behind brands such as Pauls, to the consumer watchdog, claiming the company's farm gate prices are up to 6 cents-a-litre lower than the cost of production.

She wants the ACCC to investigate documents she says show that even though Lactalis includes payments from a 10 cents-per-litre drought levy in farm gate prices paid to Queensland dairy farmers, the prices were still lower than the cost of production.

The cost of production is calculated by the Queensland dairy accounting scheme.

"This blatantly disregards the purpose of the payment as an additional levy given exorbitantly high production costs during drought," she said.

"I'm also frustrated that Lactalis has unreasonably pressured farmers into accepting this lowball offer before January 1, which is when the mandatory dairy code of conduct will come into effect."

The Courier-Mail was unable to reach Lactalis for comment yesterday.

The referral follows the Australian Competition and Consumer Commission forcing Coles earlier this month to pay Norco an extra $5.25 million after an investigation found it had not been passing on the full drought levy to dairy farmers.

Senator McDonald also blasted supermarkets for ­"appearing to turn a blind eye" to the conduct of their milk suppliers. "Supermarket executives told me in a Senate hearing this month they had received assurances from processors that prices offered to Queensland farmers were above the costs of production," she said.

"But after examining the situation, I believe the supermarkets are not exercising due diligence in ensuring the ethical sourcing of their milk," Senator McDonald said.

The Morrison Government last week unveiled a new dairy code of conduct that will force processors to be more transparent from January 1, but stopped short of ordering a floor price or "fair farm gate" price.

The Courier-Mail revealed last month that one Queensland dairy farmer was walking away from the industry each week with only about 300 left in the industry across the state.

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