It was the product at the centre of the supermarket wars but now Woolworths has run up the white flag, this morning making the shock decision to raise the price of milk.
From tomorrow $1-a-litre milk will be axed in Woolies stores. The dairy staple will go up by 10c per litre.
A two-litre bottle of milk will cost $2.20 and a three-litre bottle $3.30.
The move applies to Woolworths branded milk only.
The supermarket giant has said the move will benefit struggling farmers who will receive “every cent” of the price increase.
Coles and Woolworths have been under increasing pressure to raise the cost of fresh milk by the dairy industry that have said $1 a litre is unsustainable.
Last week, Australia was shocked by images of thousands of dead cattle drowned by floods in northern Queensland.
Woolworths Group CEO Brad Banducci said times remained tough for farmers: “This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live. It’s clear something needs to change and we want to play a constructive role in making this happen.
“We believe the long term sustainability of our dairy industry — and the regional communities they help support — is incredibly important for Australia.”
Mr Banducci said the price hike would deliver higher milk prices to more than 450 Australian dairy farmers supplying Woolworths branded fresh milk.
“While we’re realistic this won’t solve broader structural issues, we hope it will help inject much needed confidence into the sector and the regional communities dairy farmers do so much to support,” he said.
Australian Dairy Farmers CEO David Inall has backed the move: “There is no doubt that this is a game changer in the fight against discount dairy that has long frustrated the industry.
“It is reassuring that Woolworths has committed to deliver the full 10 cent increase back to those farmers who supplied the milk into that product category.”
Woolworths acknowledged some customers would be dismayed by the price change.
“We’re acutely aware of the budgetary pressures facing many of our customers and have not taken this decision lightly,” Mr Banducci said.
“We believe it’s the right thing to do and a key step in shoring up fresh milk production in Australia. We’ll continue to work very hard to offer great value to our customers across their total shop.”