A new brand of Australian milk that guarantees a fixed-price contribution from every bottle sold is paid into the Victorian Farmers Federation’s (VFF) new Farmers’ Fund goes on sale at Coles supermarkets in the state this week.

The new Farmers’ Fund milk, which is produced by Coles and Australian milk processor Murray Goulburn under licence from the VFF, guarantees 40 Australian cents (about 30 US cents) from every two-litre bottle sold will be paid into the fund designed to help support farmers and reinvest in dairy industry initiatives.

Coles will start selling the line in two-litre bottles of skimmed or full cream milk varieties.

The VFF said Coles has kick-started the fund with an AUD1m (US$772,000) contribution, which allows the the federation to “fast-track applications and the approval process for grants” to farmers. Dairy farmers in southern Australia can apply this month with applications for the first round closing on 30 September, the VFF said. The first round of grants will be distributed by mid-October, the VFF said. “Every three months, all funds raised through the sale of Farmers’ Fund milk will be distributed through a new round of applications.”

Farmers’ Fund milk gives consumers “an opportunity to invest in a stronger dairy farming future, where grants will be distributed for infrastructure, education or expert advice that helps build a more viable business”, the VFF said.

VFF president David Jochinke said: “Many people have asked what they can do to help dairy farmers. If they are not already buying branded milk, they can now buy Farmers’ Fund milk knowing that they are directly investing 40c straight into the fund. Milk is our first product and is the start of something much greater. There is a great opportunity for a farmer advocacy group like VFF to leverage the Farmers’ Fund brand to share with consumers the challenges farmers face and show how to support them all year round, not only in times of need.”

The VFF will oversee the management and administration of the fund. Representatives from VFF, its dairy arm the United Dairyfarmers of Victoria and the National Farmers Federation “will act as the selection panel to ensure farmers have oversight of the fund”, the VFF said. “Dairy farmers can apply for grants that will help build viable businesses, including support to help farmers upgrade their dairy, install a more efficient irrigation system or increase productivity.”

The initiative comes as Australia’s dairy industry faces tough conditions after months of low international dairy commodity prices. Last month, Murray Goulburn reported its full-year results covering a difficult period, during which the company cut payments to its farmer-owners, issued a series of profit warnings and announced the departures of its CEO and CFO. The price cuts angered some in the farming community. Fonterra also cut the price it paid farmers earlier this year.

Last month, the Australian government launched a probe into the country’s dairy industry after the cuts to farmgate milk prices.

Barnaby Joyce, Australia’s minister for agriculture and deputy prime minister, said he is asking the Australian Competition and Consumer Commission to undertake an inquiry into the sector and added he is granting the regulator powers to “obtain information” from companies. 

“Our dairy farmers deserve fair returns at the farm gate, as well as transparency in milk price arrangements and supply contracts, which is why I can announce the ACCC will undertake a detailed inquiry into our national dairy industry,” Joyce said. “An in-depth and independent inquiry is a thorough and fair way to uncover inefficiencies and inequities that our farmers face – and identify a way forward.”