In the last financial year 29 farms left the dairy industry, putting further pressure on milk supplies that were exacerbated by flooding and supply chain problems. Mr Thompson said the higher prices being paid to milk processors were a direct result of constricted supply, and warned the situation would only get worse unless farmgate prices improved in real terms.

“This should be an alarm bell for the major supermarkets and processors that we as a nation will continue to lose dairy farms unless they provide sustainable milk pricing that covers the cost of production,” Mr Thompson said.

“These prices rises announced by Coles are a result of dwindling supply driving the market up, and the best way to address that problem is ensuring ample supply by paying farmers a fair price.

“Farmers need to at least break even in their businesses, and the fact that we’ve lost 29 farms in the last 12 months is a pretty good sign that’s not easy.”

Seasonal conditions across NSW have resulted in reports of 30-40 per cent drops in milk yields, while natural disasters and skyrocketing input costs have further squeezed profit margins for farmers.

“If we want to avoid higher milk prices in the supermarkets we need a good supply of milk, and that cannot happen when farmers walk away from the industry,” Mr Thompson said.

“We are calling for the major supermarkets and processors to work with farmers to ensure they get a fair price for their milk, which will mean dairy farming becomes a viable business again.

“The alternative is skyrocketing dairy prices in the supermarkets, and potentially the end of Australian milk production.”