Protesting against milk price cuts, hundreds of Tasmanian dairy farmers have rallied in Devonport outside a visiting Senate inquiry into food production.

Up to 50 tractors crammed the streets in a mobile protest before 500 farmers gathered after the inquiry to focus their anger on National Foods, the buyer which produces the Pura and Dairy Farmers brands.

The farmers, who enjoyed record high prices leading to this year's crash, say the food giant is now offering them less than the cost of production, forcing them to the wall.

Many of them are now stuck with repayments on expansion loans taken in the good times, owing millions of dollars.

They say National Foods encouraged them to expand before global commodity prices crashed earlier this year.

National Foods spokesman Geoff Lynch said the industry is cyclical and farmers have come off two bumper years with record high prices.

"We are going through a down period now but that will turn and already we are seeing some signs that prices are strengthening," he said.

Mr Lynch said farm gate milk prices in Tasmania were tied to the global commodity prices but added that his company paid farmers more for their milk than other buyers.

State and federal politicians of all persuasions attended the rally.

Six months out from a state election, Tasmanian Premier David Bartlett told the rally that his government would stand with the dairy farmers in their fight.

"Tasmanian farmers are being ripped off by low milk prices and local communities are also counting the cost," Mr Bartlett said.

"All we are asking is for a fair go for farmers."

The state government has already pledged $50,000 towards a fighting fund for the farmers.

It announced a community and social welfare package as well as a business support package of pre-existing services for the dairy farmers on Tuesday.