Dairy farmers and industry stakeholders are calling on the federal government to force supermarkets to impose a levy on fresh milk and other dairy products at 30 to 40 cents a litre.

Cobden dairy farmer Ian Morris joined a panel discussion in Warrnambool last night to debate the fair transfer levy payment.

"If we added 40 cents per litre to milk sold in Australia, Australians would still be paying less than New Zealanders pay for their milk," Mr Morris said.

"That would translate to about 13 cents a litre at the farm gate for all farmers across Australia. For the average dairy farm that would increase income by around $120,000 which for a lot of farms is a lot of money.

"The consumers know it's not fair that you can go buy milk cheaper than a bottle of water or a bottle of coke.

"It's all to do with the power of supermarkets over processors and farmers."

Mr Morris grew up on the family farm in Cobden, which has been in the family for 100 years.

"My view is the dairy industry is at a tipping point and if something's not done now we are going to lose it as an export industry and become focused just as a domestic market," he said.

"That's not healthy for western Victoria I can tell you that.

"There's competition for land in western Victoria and a lot of converting of dairy farms to beef and sheep grazing.

"Land prices are moving so one of the ironies is that as land prices go up profit goes down because the dairy price income is not moving whereas that is not true for grain, sheep and beef.

"The effects on the community in real dairying areas is very significant.

"If you take dairy farmers out of Cobden, Cobden will die. Right across dairy areas that statement is true.

"I think we need to understand the economic impacts of an industry if it doesn't turn around, it has impacts on a lot of people because dairy is a major employer, it has regional impacts for government at a local, state and national level."

Former Woolworths chair John Dahlsen has more than five decades of retail experience and knows what makes supermarkets tick.

He said the federal government needs to step in to fix the retailer-farmer imbalance in dairy.

"The supermarket sector in Australia is a monopoly," he said.

"Fundamentally, milk is not being priced fairly. Australian milk is some of the cheapest in the world and it's extremely difficult to get supermarkets to lift prices.

"The only way to make that happen is government intervention.

"One supermarket won't take the lead because milk is a big traffic builder, so no individual is going to do it.

"The government has intervened in other things like gas and water, my question is why won't they interfere in relation to dairy farmers?"

Former World Trade Organisation director Gary Sampson said the whole industry needs to mobilise behind the issue.

"Here in Australia we export one third of our dairy products, 62 per cent of which comes from Wannon," he said.

"For dairy farmers here it's really an incentive to get on top of this."

Mr Sampson said it's time to rethink the legal structure that underpins world trade and production of agricultural products.

"It seems to me something we should look at seriously, we congratulate ourselves on selling milk to Asian countries, but we sell to them because we don't have access to European markets," he said.

"In a post-pandemic world and with China picking off sectors one-by-one, it's time to look at the markets that should be available to us which are not.

"The whole dairy and agriculture community should mobile itself one way or another to challenge this extraordinarily unlevel playing field at a global level.

"People might think it's pie in the sky stuff but it's not.

"Now is the time to be very forceful in terms of what can be done to level the playing field and increase export.

"It's important we speak to the minister, and then the prime minister, for Australia to be a leader in reforming the international trade system.

"In Warrnambool there was a degree of optimism that something important is coming in terms of improving access for local producers to international markets and looking towards a more cooperative manner."

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