The future of the Australian dairy industry could well be in the hands of a Senate inquiry into the impact on the dairy industry of price discounting by the major supermarkets, according to the Nationals Senator for New South Wales John Williams.

The Coalition has combined with the Greens and Independent Nick Xenophon to refer the decision by Coles, Woolworths, Aldi and Franklins to slash the price of home brand milk to $1 a litre to the Economics References Committee.

Senator Williams said he understands consumers have welcomed the price war and are saving money at the checkout.

But while people are paying less for milk, the viability of dairy farmers may be put under threat.

"Producers have been working on skinny margins for years and barely cover the cost of production. Coles claims it will be shouldering the cost burden for the milk price discounting, but dairy farmers are extremely concerned that they will be told to take a lower price when contracts are re-negotiated later this year.

The major supermarkets are at war and they don't care who are the casualties, as long as their own bottom line improves. If Coles and their competitors force out the name brands with their discounting, producers have less buyers for their milk and they become at the mercy of the big few.

Consumers must realise if the Australian dairy industry is destroyed, they will pay in the long run with higher prices at the checkout, and there will be no choice.

I urge everyone from consumers to producers and processors to make a submission to the Senate inquiry. The more information that is received will allow a thorough scrutiny of the viability of the milk industry ", Senator Williams said.

Details can be found at http://www.aph.gov.au/Senate/committee/economics_ctte/dairy_industry_supermarket_2011/index.htm and the Committee will report by the 15^th of April.