DAIRY farmers in Northern NSW are likely to suffer from price pressures being placed on their colleagues further south, according to a local representative.
Tuncester dairy farmer Paul Weir said most dairy producers north of Grafton were generally included in Queensland during negotiations with processors.
They had already concluded their discussions for this year, which resulted in a decrease in farm-gate price, Mr Weir said.
But in southern areas such as the Hunter, farmers are being asked to take a savage drop in their prices, according to Australian Dairy Farmers (ADF).
"It has been reported that in the early stages of current negotiations with a major processor, Parmalat, NSW farmers are being asked to take a drop in farm-gate price of three to four cents per litre for new contracts to supply milk to a major supermarket home brand contract won by this processor," the ADF states.
A price cut of this magnitude would render the vast majority of NSW farms supplying the drinking milk market unprofitable and be catastrophic for the industry in NSW, the ADF said.
Parmalat had won the contract to supply Woolworths with milk, Mr Weir said.
However, he said, some processors were having to "chase milk" to fulfil their contracts, while others had more than they knew what to do with.
The situation was "very messed up", Mr Weir said, and the farmers were the losers.
"Most farmers are very disillusioned and wondering about the long-term viability of the industry," he said.
While Parmalat was not interested in buying milk north of Grafton, any pressures on prices in the south would have an impact on the whole industry, Mr Weir said.
Farmers in Queensland and Northern NSW are being driven out of business by the price wars, according to the ADF.
"Coles has continually tried to claim that dairy farmers are not being impacted by the pricing of milk at an unsustainable $1 per litre. This is simply not true," it said.
"The evidence is in and the Coles-led milk-price war is directly impacting dairy farmers. There is now no doubt Coles' gain is farmers' pain."