Lifting the price of milk to help farmers: Woolworths Group Ltd (ASX: WOW) has made the decision to raise the price of house brand three-litre milk by 30¢ to $3.30 at all stores nationwide to support the drought stricken dairy farmers.
The levy of 30¢ levy will apply until mid-October, when the company plans to launch a new "Drought Relief" range of milk in Queensland, New South Wales, ACT and Victoria, which will be priced at $1.10 a litre, $2.20 for two litres and $3.30 for three litres. This is 10¢ a litre more than the previous price.
Coles has also lifted the price of three litre house brand milk from $3.00 to $3.30 until the end of 2018 and welcomed WOW’s move to support the drought stricken dairy farmers. A committee for drought relief is formed, which will ensure that the extra 10¢ a litre paid to suppliers is distributed to dairy farmers. The idea of a 10-cent levy was put two weeks ago by dairy farmer Shane Hickey from Kyogle in northern New South Wales and the Queensland Dairyfarmers Organisation (QDO). However, as per the dairy farmer the 10 cents a litre would not go very far and that they needed this to be at least to be 20 cents for farmers to try to cover all costs.
Moreover, the Federal Agriculture Minister David Littleproud had backed the efforts of a 10 cent a litre drought levy and said this was a win for dairy farmers. He applauded Woolworths to show the leadership regarding it. Further, the increase in the price of milk, for drought relief, is considered as a very important step in breaking the cycle of consumers that see dairy as a discount product. Coles have already committed almost $12 million to drought relief, that includes $5 million from the Coles Nurture Fund to assist drought-affected farmers.
WOW stock has otherwise slumped 1.625% as at September 20, 2018, 3:50 PM AEST. Wesfarmers that owns Coles, also slumped by 1.9%.
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