New Delhi, Dec. 16 -- One of the country's largest milk processors should be investigated for ripping off farmers, a Queensland politician says.

Liberal National Party senator Susan McDonald has called for the Australian Competition and Consumer Commission to look into milk distributor Lactalis over allegations it isn't paying production costs and the drought levy in full.

She said she has seen documentation which reveals Lactalis is paying farmers less than what it costs to produce milk, and is including the federal government drought-levy to farmers in their increased prices, rather than adding it on at the end.

"This blatantly disregards the purpose of the payment as an extra levy given exorbitantly high production prices during droug...