Coles' milk deal gives fresh hope to South Australian farmers SA dariy farmers and industry suppliers march through Murray Bridge, to protest low farm-gate milk prices last month. TELL US: Will this benefit our dairy farmers? AUSTRALIA'S largest milk processor has announced a deal to supply fresh milk to Coles which has the potential to revitalise the struggling national dairy industry. The Coles deal involves stocking Murray Goulburn's Devondale milk brand as well as supplying milk for its home brand. The 10-year deal, worth an estimated $2 billion, replaces Coles' existing house-brand suppliers - Parmalat and Lion - on the east coast. The dairy industry yesterday welcomed the deal as a catalyst for higher prices to roll through the dairy sector, while consumers continue to get access to low-priced milk. It also provides a model for smaller farmers and rural industries to deal with major supermarket chains. The deal is expected to benefit South Australian farmers because Murray Goulburn buys about 30 per cent of the milk produced in the state. Coles expects the deal will benefit the entire dairy industry as higher farm-gate prices ripple through the sector. "The most important thing here is the reassurance by Murray Goulburn that the farmers supplying these contracts will see an increased farm-gate return from July 2014," Australian Dairy Farmers president Noel Campbell said. Murray Goulburn managing director Gary Helou said the milk price paid by Coles under the unique agreement locked in a premium that would deliver additional profits to Devondale dairy farmers during the 10-year contract. Mr Helou said he was "very hopeful" of similar deals with Woolworths and other supermarket companies. "The daily pasteurised milk segment is currently mainly supplied by foreign-owned companies that repatriate profits to overseas shareholders," he said. This is a logical growth opportunity that extends Devondale's domestic presence in consumer markets and is expected to lock in returns that will be paid to farmers through higher farm-gate prices. These higher prices will benefit all dairy farmers. The deal is expected to help offset the decision by Coles, Woolworths and other supermarkets to cut the price of home-brand milk to $1 a litre, which the industry has been fighting. South Australian Dairy Farmers' Association president David Basham said he was nervous about unintended consequences flowing from the deal.