COLES has announced three new major dairy contracts which it says will see the amount of milk it sources from WA farmers increase by 33 per cent.
Under the three-year contracts WA dairy farmers will provide Coles with an additional 7.5 million litres of milk.
Brownes will produce Coles cream and yoghurt using over 4mL of milk a year; Mundella Foods will produce Coles cream using 1.8mL of milk and Harvey Fresh will use 1.5mL to make Coles custard.
The new contracts follow Coles' July announcement that it was awarding its WA private label milk contract to Harvey Fresh.
Coles merchandise director John Durkan said the new contracts mean Coles would have private label dairy partnerships with all the major locally-owned WA processors.
"This is further evidence of Coles' commitment to developing long-term sustainable partnerships with WA dairy processors," he said.
"These new Coles brand partnerships are great news for the WA dairy industry.
"They will see Coles source extra milk volumes to produce local products for our WA consumers."
WA Dairy Farmers section president Peter Evans said the key to the new contracts was in the detail.
"This announcement is a good thing, so long as additional dairy products are being sold and if there is a margin in it for farmers," he said.
"If it's similar to the Homebrand contract where milk was changed from Brownes to Harvey and sold in a lower margin contract then it isn't doing anything for the dairy industry."
Mr Evans said it was a positive step by Coles to repair its relationship with WA farmers, after dropping the price of private label milk to $1 a litre earlier in the year, effectively removing $25.2m from the WA dairy supply chain and placing producers under pressure.
"These new contracts will hopefully give farmers a reasonable price for their product," he said.