Is this the end of $1 milk?

Customers buying $1 milk by the litre from supermarkets might soon have to look elsewhere.

The CEO of Canadian milk giant Saputo Lino Saputo, which is set to buy Australia’s largest dairy processor Murray Goulburn, says he’ll have to check the low prices make sense.

"For all the energy and effort that farmers are putting into producing milk, I'm not sure that it is the right value,” he said.

Dairy Australia’s John Droppert said “we’re seeing a fairly challenging dairy market at the moment” and it was affecting the domestic market.

It could be the end of $1 cartons of milk. Source: 7 News

Three years ago the "farmgate" price for milk was 51c a litre, now it’s just 45c.

Big supermarkets selling private label milk for around $1 have hurt farmers who say they cannot keep selling milk for less than the cost of production

Dairy farmer Jim claims “most people” will leave the industry.

“Because they can't make a living, they work damn hard for very little return," he said.

Some retailers say it's consumers dictating price. Source: 7 News

Some retailers and shoppers agree. Grocer Harris Farms bumped prices last year to support farmers and say sales immediately rose.

"So customers actively chose to go with something they felt comfortable with from a values perspective,” Harris Farms’ Tristan Harris said.

Dairy farmer Jim says people will leave milk farming. Source: 7 News

But other retailers say that with households sharply focused on minimising grocery bills, it's consumers keeping up the pressure on them to sell products as cheaply as possible.

No immediate change is likely. Saputo has said it'll honour existing price agreements until they expire.