Federal Agriculture Minister David Littleproud wants them to voluntarily extend and review the current 10 cents a litre temporary levy on fresh milk to other milk products like yoghurt.

“I have asked them to each individually consider extending and increasing the amount of the support they provide dairy farmers who faithfully supply products across the full dairy cabinet,” he said in a statement on Wednesday.

This would allow the financial benefits to be distributed evenly to dairy farmers, rather than only to those whose milk happens to end up in private label milk.

“It is only fair that retailers play their part in giving farmers a leg up during this difficult time,” the minister said.

“This is a way of making amends for damage to the industry during the years of $1 (per litre) milk prices.”

Dairy farmers are now dealing with increased uncertainty from the impact of COVID19, on the back of drought and bushfires events.

Mr Littleproud said supermarkets were prospering during the COVID-19 crisis, which means they have an opportunity “to rebuild trust and ensure more money gets into dairy farmers’ pockets”.

But milk processors are also to blame after a 2018 report by the consumer watchdog found the industry determined what farmers are paid regardless of what price supermarkets charged consumers for milk.

The performance of Australia’s dairy industry and the profitability of dairy farmers since deregulation in 2000 was referred to a Senate committee in October that is due to hand in its report in June.

Mr Littleproud said dairy farmers made clear to the inquiry that a milk price of $1.50 per litre would be sustainable for the industry.

Queensland Dairy Organisation President Brian Tessmann said this price rise should be applied to other dairy products like cheese and UHT milk.

He said failure to prop up the industry would lead to more Australian farmers losing their livelihoods and the market being flooded with inferior foreign products.

“There’s no cheap milk overseas, it’s only inferior product that you have to pay more for, so we have to look after the local dairy farmers or we won’t have a local supply,” he told ABC radio on Wednesday.

He said profits had dropped during the COVID-19 crisis, despite a spike in fresh milk sales at supermarkets.

Mr Tessmann said the drop coincided with the collapse of the cafe and restaurant industry, and a drop in more profitable lines like flavoured milks.

“There’s probably not a huge difference in the litres of milk being sold but there’s certainly a difference in the profit that’s being generated.”

Some 500 dairy farmers left the industry last year and many did so because the cost of production was above the market price.

-AAP