Dairy farmers have received a boost from higher milk prices.
Dairy farmers have received a boost from higher milk prices.

Cash flows for dairy farmers

WOOLWORTHS fresh food director Paul Harker says shoppers have supported the supermarket giant's move to end $1-a-litre milk, with sales steady in the wake of the price rise.

Mr Harker said the decision by Woolworths to permanently increase the price of its own-brand milk range is expected to deliver dairy farmers an extra $30 million a year.

"It's been heartening to see our customers back our efforts to support a more sustainable dairy industry, Mr Harker said.

The supermarket giant has already handed over more than $10 million to dairy farmers on the back of drought relief initiatives and permanent price increases to its private-label fresh milk range.

The cash will benefit more than 450 dairy farmers, including 160 in Queensland.

Queensland farmer Garry Wheeler said the higher price has made a "massive difference" for his 200-cow dairy.

"It has taken a lot of pressure off for us," said Mr Wheeler, who with wife Natalie runs a property at Kandanga Creek near Gympie.

He said the extra money would go towards paying bills, upgrading equipment and potentially expansion.

"Put it this way, the money won't be sitting in the bank," he said. Woolworths introduced a drought relief milk range in Queensland, Victoria, New South Wales, and the Australian Capital Territory late last year.

The then temporary measure increased the price of specially marked Woolworth's two and three-litre varieties by 10 per cent, taking a two-litre carton to $2.20 and a three-litre carton to $3.30.

In February, the retail heavyweight stepped back from $1-a-litre milk altogether, making the 10¢ a litre price increase permanent.

The move marked a retreat from a key front in the supermarket price wars.

Rivals Coles and Aldi were eventually forced to raise their fresh milk prices. Both Coles and Woolworths sell their one litre house brand milk for $1.20. Woolworths said it had made a $2.7 million payment to its dairy farm suppliers yesterday, taking total payments to $10.1 million. Queensland farmers have shared more than $3 million in payments putting them on track to receive $7.5 million for the year.