MILK processor Lactalis has dismissed claims it is ripping off dairy farmers by including a 10c/litre drought milk payment in a below the cost of production farm gate price.
In a media statement issued on Monday afternoon, the dairy giant which owns the Pauls brand said Lactalis was paying farmers a price that is in line with industry benchmarks, and fully recognised farm conditions and the need for a sustainable industry.
The information obtained by Senator McDonald was not an accurate representation of the negotiations and proposed milk price between Lactalis and Premium Milk, the company says.
"Lactalis prices in Queensland are negotiated with an ACCC approved bargaining group, Premium Milk, who represent farmers interests, and negotiate prices with full knowledge of other prices in the market and the operating costs of farms," the statement reads.
"Premium Milk and Lactalis have agreed on pricing, and from January 2020, Lactalis will significantly increase prices paid to farmers, which delivers farm incomes higher than the latest QDAS (Queensland Dairy Accounting Scheme) data of operating costs for a series of average farms."
The actual price paid per litre by Lactalis was not disclosed.
The statement says Lactalis passed on the supermarket drought support payments to farmers in full, in a very transparent manner that was recently reviewed by the ACCC.
"There are processes in place, agreed with retailers and farmers, to ensure the proceeds are passed on in full, and Lactalis works with an independent external auditor to report on compliance each month," the statement reads.
The milk processor also denied claims it was putting pressure on farmers to sign a new contract before the mandatory dairy code of conduct came into place.
"Lactalis continues to negotiate with Premium Milk, who represent our Queensland farmer base, in good faith on the milk price for the 2020 year in line with the existing Lactalis/Premium agreement," the statement reads.
"The contracts Lactalis has with dairy farmers expire at the end of December 2019, and in order to continue purchasing milk from dairy farmers, Lactalis proposed a one year contract for 2020.
"This ensures our farmers have some certainty and are not out of contract while waiting for Dairy Code of Conduct contracts which are prescribed to run from July to June.
Lactalis says it not be making any further statements.
