Milk Levy For Dairy Farmers Could Go Ahead As A 'Temporary Measure'

But the PM is cautious it's an added cost to 'mums and dads pouring milk on their cornflakes'.

A proposal to introduce a 10-cent-per-litre levy to help drought-affected dairy farmers has been met with caution from the prime minister, but may still go ahead as a "temporary measure".

The Queensland Dairyfarmers Organisation on Monday launched a petition calling on major supermarkets to up the retail price by 10 cents, and return the money to farmers like Tony Biffin who are juggling spiralling feed costs and a long de-valued price for their milk.

"We need 10 cents extra per litre to survive, to feed our animals and to feed ourselves," he told ten daily, from his Cawdor property on Sydney's outskirts.

READ MORE: An Extra 10 Cents Per Litre Of Milk Would Help These Farmers Survive

Dairy farmers Debbie, Todd and Tony Biffin want a fair price for their milk. Image: Emma Brancatisano

Prime Minister Scott Morrison said while he would consider a proposal from the agricultural  minister, he is cautious about seeing household prices go up.

"My first instinct is never to try and solve a problem with a tax, and I don't want to see an increase in prices for Australians," he told The Nine Network on Wednesday.

"I want to ensure the sustainability and viability of our dairy sector but not doing that at a cost to mums and dads pouring milk on their cornflakes."

The petition has so far received over 26,300 signatures since Monday -- an unequivocal show of public support.

"I'm not rejecting it, that is certainly the case. A proposal will come forward and we will consider it carefully," Morrison said.

Dairy farmers are hit the hardest during drought. Image: Emma Brancatisano

Agricultural Minister David Littleproud, who supports the levy as a "temporary" principle, said he has met with the two supermarket giants, with Woolworths "showing leadership".

"Coles is more reluctant, but I hope they'll come on board," he said in a statement on Wednesday, noting he intends to speak with Aldi and IGA in due course.

"If retailers get to a point where they support a ten cent levy on each litre of milk ... I am happy to try and help to facilitate it as a temporary measure while structural reform happens in the industry."

Littleproud said he was awaiting a "united" response from the dairy industry to an Australian Competition and Consumer Commission report into the sector.

The report, which found no relationship between retail private milk prices and farmgate prices not set by supermarkets, was cited as a reason to vote down a similar levy proposition in the Senate last month.  

"A temporary levy could give the industry time to sort out its position on the ACCC report and structural reform," Littleproud said.

"I've been Minister for eight months and this problem has been around for more than 20 years -- deregulation began in the 1990s. We've got to start somewhere and get our farmers through this tough period."

The proposal also requires guarantee from milk processors that the levy would be returned to farmers' pockets, with Norco and Parmalat so far confirming their support.