In the years since the $1 per litre milk wars broke out huge numbers of dairy farmers have left the industry and the price squeeze continues on those that remain.

Speculation that Australia would lose a milk processor like Lion and Parmalat in the process has not happened, but both have tried to secure lucrative private label supermarket contracts.

Now the Australian Competition and Consumer Commission is investigating Parmalat following complaints from dairy farmers across NSW and Queensland about low contract prices.

Mike Logan of the advocacy group Dairy Connect said farmers who were asked to sign the contract by January 1 this year do not want to bear the brunt of Parmalat's milk contract negotiations.

"Parmalat is reluctant to discuss it with farmers other than to say, 'These are the arrangements and you sign or you don't!'" Mr Logan said.

"We originally approached Parmalat, then we went through the NSW Small Business Commission who approached Parmalat, but Parmalat rejected that discussion.

"So we've also taken it to the Australian Competition and Consumer Commission, which is investigating the contract and my feedback from them is that there are issues that are worth discussing.

"But Parmalat is confident that its contract is legal, so this is ongoing."

The international dairy indicator price has plunged in the last 12 months, with oversupply in Europe and the US, coupled with reduced demand from China.

But Mr Logan said Parmalat was dealing only with the domestic fresh milk market.

"None of this milk is for export, all is for local consumption and the local price is still a dollar and the branded products are still selling for a similar price," he said.

"The supermarkets can sell the milk for whatever price they like, but the issue is what they pay farmers for it, and at the moment, it's at or below the cost of production which makes it difficult to invest in sustainable practices in animal welfare, occupational health and safety, and the environment."

A spokeswoman for Parmalat said the company was not able to comment.