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Australia: Dairy farm fund for sustainability improvements

Australian supermarket group Woolworths has started a Dairy Innovation Fund, offering US$3.7 million in grants to dairy farmers.

The grants are meant to support on-farm improvements over the next 3 years. The aim is to help farmers upgrade machinery and improve or develop sustainability programs.

The dairy fund will assist dairy farmers innovate and increase efficiency, sustainability and resilience to manage seasonal variations through investments in technology and infrastructure, Woolworths says.

Coles has first began sourcing milk direct from farmers in Victoria and southern and central New South Wales in June 2019. Photo: René Groeneveld
Coles has first began sourcing milk direct from farmers in Victoria and southern and central New South Wales in June 2019. Photo: René Groeneveld

Australian dairy farmers who contribute milk to Woolworths' dairy supply chain can apply to access up to US$75,000 each in grants. The first round of applications started on 1 December. Research from Dairy Australia, the national body for the dairy industry, shows around 80% of dairy farmers intend to make investments in their business in the next 2 years.

According to director of buying Paul Harker of Woolworths, dairy farmers have faced tough conditions in recent years through droughts and bushfire. "The Dairy Innovation Fund will help farmers invest for the future, while also increasing resilience to withstand these types of challenges," he says. "It will assist in turning long-planned farm improvements into a reality."

Drought levy

Woolworths already has a 10 cent per litre drought levy in place on all 2- and 3-litre fresh own-brand milk varieties. This levy has raised more than US$45 million for 450 dairy farmers since 2018. Australian supermarkets have been criticised in the past for harming the dairy industry by reducing farmer's profitability through low AUS $1 (US$0.75) per litre milk prices.

The Dairy Innovation Fund will support around 60 businesses over the next 3 years, with yearly grant application rounds open to all dairy farmers in the Woolworths supply chain, including those supplying vendor brands.

The other big Australian supermarket group Coles will meet with Western Australian dairy farmers in coming weeks to discuss opportunities to invest in on-farm sustainability initiatives, as a part of new direct sourcing agreements for Coles Brand fresh white milk.

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Direct sourcing

Coles has restructured its Coles Brand milk supply model in Western Australia (WA) by contracting directly with Australian dairy farmers, replacing the previous model under which Coles Brand milk sold in WA was sourced through processors, who set the price farmers received.

Coles Brand fresh white milk sold in the state is now sourced directly from WA farmers under transparent contracts that include a minimum farmgate price until June 2023, providing farmers with greater confidence over their income.

Coles has partnered with 10 dairy farmers across South West WA to supply a total of 35 million litres of milk per year to be used in Coles Brand milk sold at all Coles supermarkets and Coles Express petrol and convenience sites in the state.

In addition to creating a dedicated milk pool, Coles has leveraged its direct relationships with industry stakeholders to establish the Coles Sustainable Dairy Development Group (CSDDG), through which Coles invests directly in on-farm sustainability projects in consultation with dairy farmers.

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Confidence

Since June 2019 when Coles first began sourcing milk direct from farmers in Victoria and southern and central New South Wales, the CSDDG has invested in animal health-care technology trials and helped improve workplace safety by providing supplies of hand sanitiser and installing defibrillators at dairy farms.

WA dairy farmer Don Fry from Brunswick Junction is one of 10 WA dairy farmers who have been supplying milk to Coles under direct contracts since October. He says he is pleased with his new long-term contract. "It gave our family, with sons on the farm, genuine confidence in our future."