Coles caught out: Supermarket failed to pass on 10c milk levy to dairy farmers

Coles will pay dairy farmers more than $5 million dollars after allegedly failing to fully pass on 10c per litre rise in the price of Coles branded milk.

An Australian Competition Consumer Commission (ACCC) investigation found Norco dairy farmers were shortchanged after the supermarket failed to pass on all of the levy added to the price of milk, which was praised for helping farmers out.

The supermarket giant introduced the levy under pressure from the public on March 19, but reduced the amount passed on to farmers from April 1.

“They reached a deal with Norco to pay an extra 6.5c a litre for milk,” ACCC chair Rod Sims told 3AW’s Neil Mitchell.

“Then, they reduced the 10c a litre payment back to 3.5c.

“We think that was a pretty lousy thing to do.”

The consumer watchdog began investigating the broken promise with the intention of taking Coles to court, but the supermarket agreed to pay the money before the dispute escalated.

“We were engaging with them and they would’ve known we were on the way to the court room,” Mr Sims said.

“If we went to court there was no way we could get the court to order them to pay that money to farmers, it’s a technical legal point.

“By simply saying ‘okay we’ll drop the court action if you pay the money’ we get the money to farmers.”

Most farms will receive a lump sum of over $10,000 within a week, and going forward the full 10 cents per litre will be passed on.

In a statement, Coles said it does not agree with the ACCC, but has decided to pay farmers $5.25 million to dairy farmers.

“Coles is pleased to be able to provide additional support to Australian dairy farmers while we continue to work with industry and government stakeholders to find long-term solutions to ensure the sustainability of the Australian dairy sector,” the supermarket said in a statement.

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Image: Bloomberg