Supermarket giant Coles has paid $5 million to a group of farmers after accusations it short-changed them on a scheme to provide drought relief.
The Australian Consumer and Competition Commission investigated allegations the supermarket giant failed to follow through on indications in March it would pass on to farmers the full benefit of a 10¢/litre price hike for its Coles-branded two-litre and three-litre milk.
The supermarket chain began paying the extra 10¢/litre to Norco suppliers but when a previously agreed 6.5¢/litre increase kicked in, the amount was reduced.
The ACCC believe this was an "egregious breach" of the Australian Consumer Law and had been prepared to take the company to court to allege misleading conduct.
“Coles allowed farmers, consumers and the Australian public to believe that its 10¢/litre price rise would go straight into the pockets of dairy farmers, when the ACCC alleges this was not the case for Norco farmers,” ACCC chair Rod Sims said.
Federal Drought Minister David Littleproud called for people to boycott shopping at the supermarket giant.
“Coles promised me when I negotiated the deal that all the money would go to farmers,” Mr Littleproud said.
“They told their customers they were helping farmers, then tried keeping the money.
“Coles has shown its true colours and needs to put things right.
“Coles should now lead the way and put at least 20¢/litre right across its dairy range, not just on milk, to show they really do care about dairy farmers.
“Australians should show their support for dairy farmers by boycotting Coles until it comes good with this.”
Blighty dairy farmer and NSW Farmers Association dairy committee member Malcolm Holm said the findings were a win for the industry.
“My initial reaction was it's a good thing what the ACCC found,” he said.
“It just holds the supermarkets and other buyers to account.
“There's still a long way to go but a signal has been sent that things are changing.”
Gunbower dairy farmer Stephen Brown said it would help the farmers affected and compared it the Federal Government's Water for Fodder program.
“It all adds up. It's like the Water for Fodder program — 50 Ml won't make or break you but it will help you. You're not going to knock it back.”
Coles has committed to pay an additional 7¢/litre for two-litre and three-litre Coles-branded fresh milk, amounting to $5.25 million to Norco for milk supplied between April 2019 and June 2020.
The ACCC understands Coles passed on the 10¢/litre increase to other dairy processors.
Coles said it respected the regulatory process but disagreed with the ACCC's interpretation of these issues.
Coles had not responded to a request for further comment at the time of going to press.