South Coast dairy farmer Rob McIntosh escaped the worst of the milk price crisis in Victoria and Tasmania, but faces a cut in his monthly milk cheque.
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Mr McIntosh supplies the Murray Goulburn co-op, which hit their suppliers in Tasmania and Victoria with retrospective charges last month after global prices collapsed.
Mr McIntosh, a former spokesman for his industry, supplies the NSW fresh bottled milk market and was not forced to pay back money to Murray Goulburn. But the farmers co-operative has cut its farmgate price for NSW producers from 52.5 cents per litre to 46.7 cents from July 1.
Since Coles, which is supplied by Murray Goulburn, introduced $1-a-litre -milk five years ago, the dairy farmer, who milks 230 cows, has not received an increase for his milk. Yet his production costs have increased, eating away his profit margin
A social media campaign triggered by the price collapse, urging people to buy branded milk, has heartened producers. In Mr McIntosh's home town of Berry a boutique milk co-op, independent of major supply chains, is riding high thanks to the campaign, increasing its staff, and expanding supply outlets on the coast and Wollongong.
"Their production has gone up 50 per cent, they are flat out doing shifts through the night. They think it is great, it is probably the first tangible sign of local support for a branded product," Mr McIntosh said.
Another beneficiary of the campaign, Little Big Dairy at Dubbo, experienced a 20 per cent increase in orders of their milk and milk products. A member of the family-owned enterprise, Erika Chesworth, succeeded Mr McIntosh as chair of NSW Farmers dairy committee.
Ms Chesworth says public support is heart-warming. "It is almost like the consumer was waiting to be told what they can do to support Australian farmers," she said. "When dairy farmers see their milk offered for $1-a-litre in supermarkets, it's a massive kick in the guts.
"This price drop to farmers will drive a shortage in milk supply that will be filled by low value export milk produced in Victoria," Ms Chesworth said.
She says all milk produced in NSW is used domestically, and that NSW-produced milk also fills a void of 70-80 million litres in the Brisbane market, consequently a cut in farmgate prices was not justified.
"We strongly suspect that the retail price will not fall, and the processors will be using this downturn to plug the hole in the price they are now receiving on the export market. So the domestic milk supplier pays the price again."
A Murray Goulburn spokesman says shelf prices are a matter for the retailers to determine. "There is no link between the shelf price and the price paid to farmers under our contract with Coles," he said.
"The milk price paid by Coles to MG locks in a premium above the prevailing farmgate milk price that delivers additional profits to our dairy farmers over the life of the contract.
"The premium is not affected by price fluctuations in international dairy markets or movements in the Australian currency along with rise and fall provisions to protect the premium farmers receive," the spokesman said in a statement.
