TASMANIAN dairy farmers and their communities will be devastated unless they get a better deal on milk prices, a federal inquiry has warned.
In a report tabled last week, the Senate inquiry into food production expressed "great concern" about the low milk prices on offer from processing giant National Foods, which it said were "well below" production costs.
"The low farm-gate price for milk is threatening the viability of many dairy farmers in Tasmania," the report said.
"If milk prices continue at their current level, many farmers will exhaust their financial resources and come under pressure to exit the industry."
The report took aim at National Foods, saying its offer of a maximum price of 37.5 cents a litre in new contracts announced in October was "well short" of the 39.8 cents a litre that dairy farmers required to cover their costs of production.
It said independent legal advice had been sought on more recent contract revisions and found them fairer than the original contract.
"However, although the revised contract addresses some of the concerns raised in evidence to the (inquiry), the advice suggested that there is scope for further improvements in the contract," the report said.
It called for more transparency in milk pricing by companies, saying there were "great difficulties" in getting cost estimates at various points in the value chain.
It also expressed concern about market concentration and the use of market power in the Tasmanian dairy industry.
The concurrent inquiry by the Senate economics committee into the Australian dairy industry should "rigorously pursue" the issue of whether competition laws needed toughening to deal with the situation, the report said.
