The Queensland Government has been accused of "complete hypocrisy" for ignoring its own "Buy Queensland" policy and choosing two multi-national dairy processors over the family-owned Maleny Dairies to supply fresh milk and dairy products to some of the state's major hospitals.

Key points: A Government spokesperson said a larger supplier was needed to fulfil the complex contract

A Government spokesperson said a larger supplier was needed to fulfil the complex contract Maleny Dairies says the company would have been able to meet the supply demands

Maleny Dairies says the company would have been able to meet the supply demands The bulk of the contract went to Lactalis, whose national office is based in South Brisbane

French-owned Lactalis and Chinese owned Lion Dairy and Drinks won the tender to supply the Metro North Hospital and Health Service for the next two years, with a Government spokesperson saying a larger supplier was needed to fulfil the complex contract.

"It's a slap in the face," Maleny Dairies manager Peter Falcongreen said.

"We are 100 per cent Queensland owned, 100 per cent Queensland employees — all the business chain with the farms and all their families and all the businesses that they support running their farms — are all Queenslanders."

"Any implication that the tender was too big for us is a complete falsehood. It's a complete hypocrisy."

Last year Premier Annastacia Palaszczuk launched a new multi-billion-dollar Queensland Procurement Strategy called "Buy Queensland".

It promised a major shift in the way the Government bought or hired supplies and services — pledging to support local businesses and jobs, reduce transport and prioritise regional Queensland when it purchased food and beverages.

Maleny Dairies owner Ross Hopper said he was gutted his company lost the tender to foreign-owned companies after donating time to attending the Government's "Buy Local" marketing events at the Brisbane Ekka and Sirromet wines.

"It's a load of hogwash, we feel like fools after believing the Government. They were spruiking that they were going to buy local and they've ignored their own policy," Mr Hopper said.

"I would have had no problem if they had chosen an Australian-owned processor over us.

The company insists it could have fulfilled the requirements of the tender. ( ABC Rural: Jennifer Nichols )

"For them to be flying the flag Queenslanders for Queensland and buying local, they're not doing that are they? They're not looking after their locals, they were shopping around and went with foreign companies."

Metro North Hospital and Health Service employs more than 19,000 staff and treats more than 1 million patients each year, with dairy products provided to thousands of patients and staff daily.

Acting Health Minister Leeanne Enoch said the bulk of the contract went to Lactalis, whose national office is based at the Pauls' milk factory in South Brisbane.

"The Palaszczuk Government knows the importance of supporting local providers wherever possible," Ms Enoch said.

"The successful contractor was the only tenderer able to supply the full range of full and low-fat products required including milk, cheese and yoghurt, to meet the dietary standards and varied requirements of patients.

"They're also the largest milk processer in Queensland and the biggest buyer of raw milk in Queensland."

The Government said less than 3 per cent of the contract was being filled by Lion Dairy for a very niche product that only they produce, used in some patient diets.

"Due to the volumes and complexity of some contracts, larger suppliers are often required to fulfil these requirements," a Government statement said.

Maleny Dairies' Peter Falcongreen says the decision is a "slap in the face". ( ABC Rural: Jennifer Nichols )

However, Mr Falcongreen maintained the tender allowed for not being able to supply all products and Maleny Dairies nominated Norco as the other Australian-owned dairy company to assist in supply.

"A significant component of the tender was about demonstrating capacity — we had to prove through documentation that we could supply the volume and had there been any risk we would not have wasted two weeks of our time putting the proposal forward — this volume was easy for us," Mr Falcongreen said.

Maleny Dairies is currently supplied by 11 South East Queensland farms and in recent years has invested more than $9 million in factory improvements, including installing two robots on the production line to increase efficiencies and processing capacity.

"We would have taken on another farm [if we had won the contract] and all the time we are gearing up so that we are a capable company to move forward and this is what it's all about, what better way than to help patients get better than by giving them healthy milk," Mr Hopper said.

Since deregulation, the number of Queensland dairy farms has been decimated, from 1,500 to around 300.

Low milk prices, drought and rising grain prices have devastated the industry.

Ms Enoch said almost all the milk provided to patients and staff would be fresh milk, with as much as possible from Queensland dairies.

"Where milk can't be sourced from Queensland, it's sourced from interstate, not overseas," she said.