Water Resources Minister David Littleproud wants Australians to boycott Coles — even though the supermarket giant has just pledged more than $5 million in extra payments to dairy farmers in NSW and Queensland.

Key points: Coles is pledging to pay farmers in NSW and Queensland an extra $5.25 million following an ACCC investigation

Coles is pledging to pay farmers in NSW and Queensland an extra $5.25 million following an ACCC investigation However, a statement from Coles said the company "disagreed" with the ACCC interpretation of its actions

However, a statement from Coles said the company "disagreed" with the ACCC interpretation of its actions The ACCC said it was pleased farmers would receive extra money starting this week

The call follows an Australian Competition and Consumer Commission (ACCC) investigation into whether Coles fully passed on a 10 cents per litre price rise it charged consumers for milk to one producer, Norco, as it claimed it would do in Coles' marketing materials.

Mr Littleproud told RN Breakfast on Monday that Coles' response was "disappointing".

"They broke their promise, that's un-Australian," he said.

"So what I'm saying is they can get back their social licence. They can show that they care about a sustainable dairy industry."

But while a statement from Coles said the company "disagreed" with the ACCC interpretation, the supermarket giant had put forward a $5.25 million payment to Norco to resolve the issue.

The disagreement relates to whether a pre-existing agreement to increase payments to Norco by 6.5 cents per litre, just before Coles' public 10 cents pledge, should have formed part of the payment increase.

Avoiding court

Although disagreeing with the ACCC claim, Coles committed to the $5.25 million payment "in order to avoid an unnecessary dispute and provide immediate much-needed support to Norco farmers dealing with the ongoing impact of drought and bushfires".

ACCC chair Rod Sims said last week that a court process would have prompted delays, and was pleased Norco farmers would now receive additional money starting this week.

"We were fully prepared to take Coles to court over what we believe was an egregious breach of the Australian Consumer Law," he said.

"We believe we had a strong case to allege misleading conduct by Coles."

Norco is a milk co-operative with more than 300 farmers in northern New South Wales and Queensland.

Mr Littleproud has previously called for Australians to boycott Coles.

Coles and rival food retailer Woolworths claim about two-thirds of the market.