Hundreds of dairy farmers have marched through Murray Bridge to protest against low milk prices, which they say have created a crisis in their industry.

Many farmers are receiving less for their milk than the cost of production and say their losses are becoming unsustainable.

Farmers earn about 39 cents a litre for milk but often pay 45 cents a litre in production costs.

Earlier this year, Victorian dairy farmers met to discuss their options in the face of supermarket sales of milk at as little as $1 a litre.

The South Australian Dairy Farmers' Association says the industry's woes are also being fuelled by low export prices, the high cost of feed and the carbon tax.

Association president David Basham says those factors are costing farmers at least $14,000 on average each year.

He says the costs cannot be passed on to consumers because of the way milk prices are set.

"The way it operates at the moment is the milk companies at the beginning of the financial year tell farmers what they're going to pay them for the rest of the year," he said.

"What we need to do is change that where on behalf of farmers, negotiators go in and sit down with those milk companies and we try and negotiate a better deal out of the companies, rather than just accepting what they offer."

Industry at stake

The meeting in Murray Bridge coincided with a proposal by Woolworths to buy milk directly from farmers on the mid-north coast of New South Wales.

Woolworths will launch a trial of the arrangement as part of a campaign to support the dairy industry.

The Australian Competition and Consumer Commission says it will back the trial but the move has been met with scepticism by South Australian farmers.

Family First MP and dairy farmer Rob Brokenshire says the major supermarket chains are driving dairies to ruin with low milk prices.

Mr Brokenshire says the survival of the industry is at stake.

"The Government should look at the American model where they have anti-trust laws to break down the duopoly that we have in Australia and importantly, to ensure that processes and retailers take into account viability of dairy farmers when they set prices at the beginning of each financial year," he said.

"They run the risk of losing a vibrant dairy industry, of capitalising on the growth opportunities into the future for dairy product and effectively damaging our economy, our jobs and seeing us become a net importer of dairy products."

There are now less than 7,000 dairy farmers in Australia, down from almost 12,000 just over a decade ago.

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