Woolworths to scrap milk drought levy

Woolworths will stop paying a 10-cent per litre milk levy to dairy farmers from mid-year. (AAP)

Woolworths will phase out its 10-cent dairy levy for milk farmers by the middle of the year due to easing drought conditions and rising milk prices.

The supermarket wrote to farmers through milk processors Fonterra, Lactalis and Bega on Friday to advise them the levy on its own-brand two and three litre fresh milk would be scrapped by the end of June.