IT MIGHT not sound like much, but a price cut of 1.6c/litre could greatly affect the Queensland dairy industry.
It could see farmers walk away from their properties, leaving more pressure on those who remain.
With negotiations between dairy producer Parmalat, which produces the milk brand Pauls, and Premium, which represents farmers, failing to reach an agreement by December 31, the proposed 1.6c/litre price slash has entered arbitration.
If negotiations go in Parmalat's favour, dairy farmers could lose $16,000 to slashed milk prices.
Queensland Dairyfarmers Organisation president Brian Tessmann feared a number of small farmers may shut the barn doors and leave the industry.
"I think farmers are very nervous and concerned as a lot of them are on the edge financially," Mr Tessmann said.
"If there's a significant price drop around 1.6c/litre they could probably well leave the industry.
"Of course others will somehow try to find a new home with one of the other processors but you have to be able to be taken."
Mr Tessmann said the average-sized farmer produced about one million litres of milk a year and $16,000 lost would make a big impact in the industry.
"It will have a big effect on investments and can have an impact on repairs and maintenance on the farm," he said.
After Murray Goulburn dropped their prices last year, Queensland farmers didn't expect their own producer to do the same.
Mr Tessmann said he, along with many other farmers, would like to see a price increase.
"But because of what's happened in the south, that's probably not on the cards right now," he said.
Last year farmers rallied together, encouraging consumers to purchase "branded milk" instead of the cheaper dollar-per-litre bottles.
"Farmers in Queensland have struggled since dollar milk started in 2011 but some were hopeful there might have been improvements coming," Mr Tessmann said.
"They certainly didn't expect the price in Queensland to drop."
Premium, the negotiator, was set up nearly 10 years ago and nearly half the dairy farms in Queensland are desperately seeking a resolution.
Mr Tessmann said during his time as a farmer in the South Burnett, he'd never seen Parmalat and Premium go into arbitration.
"Sometimes they'd negotiate but this is the first time they haven't managed to," he said.
A Parmalat spokesperson said Parmalat was committed to reaching a resolution as soon as possible.
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