The cost of cheap supermarket milk has now hit $1.30 per litre after Woolworths, Coles, and Aldi all lifted prices in the last week.

That means an extra 10 cents a litre consumers will now be forking out for homebrand two-litre and three-litre bottles.

It is the first increase by the retailers in more than two years after all three last increased prices by 10 cents in July 2019 after ending dollar milk earlier that year in March.

The dairy industry has always rallied against cheap milk, which they argue has devalued its product since it was first introduced in 2011.

While consumers may happily pay the extra 10 cents to support struggling dairy farmers, there is no guarantee that they will get any of it.

Dairy cooperative Norco supplies Coles 60 million litres of milk, of the 226 million its farmers produce a year, for Coles branded milk.

Norco CEO Michael Hampson said the decision was entirely up to Coles whether it passes on any of the extra 10 cents.

"We're certainly having a number of conversations with Coles in terms of where the 10 cents goes at the moment. We don't have any indication that that's going to form its way back to the farmgate milk price," he said.

"There have been notifications previously that have come out recently from retailers saying that they're adjusting their price based on previous price pressures, and that's probably where we'd see that one landing.

He said in terms of pricing in the marketplace for farmgate, there had been flurry of activity at the start of the milk season, as everyone announced their prices on June 1 and adjusted those through June and July. 

"Certainly those items, I dare say, they have already made their way into the supply chain."

Coles says it absorbed costs

Coles, which reported a $1.01 billion profit for 2020-21, will not confirm whether it will pass any of the 10-cent increase onto Norco and its suppliers.

"We have seen farmgate costs increase over the past two years, and Coles has previously absorbed these costs without impacting the retail price of Coles Brand milk," a spokesperson said.

"We believe that Coles Brand milk still represents great value for customers."

'Obligation' to pass on price rise

Dairy lobby group eastAUSmilk said supermarkets needed to ensure suppliers are given a fair share of any increase.

Shaughn Morgan, CEO of policy and advocacy, said supermarkets had a social licence and a responsibility at a corporate level to do so.

"I acknowledge that the increase in the price reflects the need to be reactive to issues around such a food staple," he said.

"But if that price is to go up, then supermarkets do have an obligation to ensure that part of that increase should flow down the value chain to the processor who can then discuss further increases in the farmgate price with their supplier."

Mr Morgan urged the retailers to consider passing on the 10 cents to the farmers who supply the commodity.

"If it's just going to be maintained in consolidated revenue and for the benefit shareholder, of that particular supermarket chain, then it's not going to be of any benefit to those who are more deeply affected by these price increases in input costs," he said.

Aldi says price review is ongoing

While Aldi has confirmed it has lifted prices of its Farmdale Fresh Milk range, it has not confirmed if it would pass the 10 cents on.

"We remain focused on reviewing pricing for the whole dairy category on an ongoing basis," a spokesperson said

"Ultimately, we always want to deliver the best value for our customers while maintaining fair pricing with our supplier partners."