RETAILERS have been urged by the Federal Government to drop their milk prices when an eight-year milk tax is lifted on February 22.

They’ve also been put on notice that the Australian Competition and Consumer Commision will take action against any anti-competitive behaviour.

And dairy farmers have been given renewed hope they may get special federal assistance to help cope with big cuts in prices paid by milk companies.

Federal Agriculture Minister Tony Burke said today he’d written to major retailers and retail associations last month telling them the government expected costs savings from the removal of the tax to be passed on to consumers.

He said he welcomed announcements that key retailers would pass the tax cut on to consumers of fresh milk, including:

  • Aldi, which has announced an immediate reduction of 11 cents per litre in the price of milk
  • Coles, which plans to reduce the price of all fresh milk by 11 cents per litre from Monday February 23, but is already reducing the price of its house brand milk
  • Woolworths, which plans to cut the price of all fresh milk by 11 cents per litre from Monday February 23, but has already reduced the price of a house brand milk in every state and territory.

“This is a responsible decision by major retailers which will save families money at the checkout, at a time when every cent counts,” Mr Burke said.

“We expect other retailers to pass on the modest savings to consumers.

“Any complaint or suggestion of anti-competitive conduct over the removal of the levy will be dealt with by the ACCC.

“The government recognises the dairy industry is under pressure with some processors dramatically slashing the farm-gate price of milk.

“We will continue to look at what potential forms of assistance may be available for dairy farmers.”

The government announced last year it would abolish the 11 cents a litre levy, which was established by the former government in 2000 to fund an industry deregulation adjustment package.

The levy funded a number of measures to help dairy farmers adjust to the removal of state and Commonwealth government price support measures.

It is collected by dairy processing companies and appropriated into a trust fund, which is administered according to statutory obligations and a statutory funding agreement between Dairy Australia Ltd and the Commonwealth.

According to statutory requirements, it was to be abolished once the trust fund was brought into balance.

This story was first published on WeeklyTimesNow on February 11, 2009.