Senator Susan McDonald has accused milk processor Lactalis of unreasonable corporate bastardry at a time when Australian dairying is fighting for its existence.

'This is an act of unreasonable corporate bastardry'

Southern Queensland dairy farmers are being refused a 5c/litre increase in the farm-gate price of milk.

DAIRY processor Lactalis has been accused of unreasonable corporate bastardry for refusing to agree to a higher price for milk produced by southern Queensland farmers.

The 110-strong farmers' collective, Premium Milk, was seeking a 5c/litre rise in the farmgate price for milk. However, talks broke down with the French multinational when agreement could not be reached.

Senator Susan McDonald said it was no wonder that dairy farmers were on their knees when it cost 65c to produce a litre of milk.

Last year Lactalis paid between 59c and 60c/L, meaning farmers lost money on every litre of milk they produced.

Lactalis supplies Woolworths with dairy brands including Pauls, Vaalia, Oak, Breaka and Ski.

"This is an act of unreasonable corporate bastardry at a time when Australian dairying is fighting for its existence," Ms McDonald said.

"I am told the Woolworths/Lactalis contract is being reviewed and hasn't yet been agreed.

"So I ask Woolworths and Coles: at a time when you are doing everything possible to promote your endorsement of exploitation-free products, why can't you ensure our dairy producers are paid fairly and reasonably in line with the cost of production?"

Senator McDonald said the Morrison Government's proposed Dairy Code of Conduct aimed to prevent unfairness.

"The code of conduct that is currently out for final consultation, is designed to specifically address this kind of unconscionable conduct by producers," she said.

"It will provide clear rules of engagement and mechanisms for producers to move forward where negotiations stall.

"I will also be working to ensure that the ultimate price setter, being the supermarkets and retailers, are also held to account.

"And I have to say, the voluntary food and grocery code of conduct has proven to be not worth the paper it's written on.

"What I am asking is that Coles and Woolworths ensure processors pay nothing less than 75c/L farmgate price to these Premium Milk farmers."

Senator McDonald is well known for her support of the dairy industry, including protesting with farmers and a live cow outside an Aldi supermarket in Beaudesert in February.

Comment has been sought from Lactilis.

CLICK HERE to make a submission on the dairy code of conduct.

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