WAFARMERS says Coles is committed to ensuring increases in milk prices flow back to producers.
The lobby group met with representatives from the supermarket giant again last week but said the lack of transparency in the industry was making it hard to determine if the latest price rise would get back to the farmgate.
WAFarmers president Dale Park said he had received varied responses when asking dairy farmers if they were receiving a 3.5 cents a litre price rise as announced by Coles two weeks ago.
"Some farmers are reporting they were 5c/L better off than at the same time the previous year, while others had reported no change," Mr Park said.
"The difficulty is Coles can't go back and find out, so we have to do a bit more work.
"If the outcome is the increase is not getting passed on, then we will have to find better methods to ensure that happens.
"That comes back to the transparency argument, which I don't think processors are too keen about."
Mr Park said many farmers were in the process of re-signing milk contracts and were waiting to see all the cards on the table before agreeing to lock into a contract.
"Coles keeps telling us, and I believe them, that they want the 3.5c/L to get back to the farmer, because they know as well as anyone that supply is dwindling," he said.
Mr Park said Coles was also interested in seeing butter and cheese produced in WA again.
"To be able to produce butter and cheese for the domestic market in WA, we would need to double the size of the existing WA dairy industry," Mr Park said.
"To do that farmgate prices need to increase, back to where people are enticed to build production."
And Coles' new attitude could extend to other sectors, with Mr Park saying that it was also thinking about a similar proposal for the meat industry.
"They were keen to discuss with us how they might be able to market differentiate certain products," he said.
Coles Corporate Affairs general manager Robert Hadler said the meetings with WAFarmers had been very cordial and constructive, focusing on what both parties could do to work together on a range of key issues.
He said the current focus of the discussions had been around work Coles had commissioned by an independent expert in food industry matters, Fresh Logic, into a breakdown of pricing through the supply chain to provide greater transparency about who gets what from retail sales.
"We will continue to work with Dale and WAFarmers on this project over the next few months and the results will be released publicly in due course," he said.