Dairy contracts driving Shoalhaven farmers to the wall

Farmers on the New South Wales south coast say the local dairy industry could be wiped out within years because of the supermarket milk price war.

Shoalhaven farmers supplying Lion Nathan have had their milk supply payments reduced by 9 per cent, with prices lowered to just 45 cents a litre for fresh milk.

Farmer Tracy Russell says the current milk prices and supply contracts are totally unsustainable for producers.

"If we don't have a dairy industry, then you'll be drinking UHT milk, or you'll be drinking reconstituted milk like they do in England and overseas in Europe," she said.

"Fresh milk will be a thing of the past."

The Federal Opposition spokesman for agriculture John Cobb says he was horrified to hear the extent of the contract cuts.

"Let me say, it's a serious eye-opener to realise that what these people here around Nowra are faced with is certainly unsustainable, they cannot survive," he said.

Source: ABC News, 31 August 2012