Australia's competition authorities yesterday [Wednesday] gave dairy farmers the green light to collectively negotiate contracts to supply milk to processors.

"Dairy farmers operating under similar farming and climatic conditions, or who operate within a distance in which milk can be economically transported to a processor's plant, or who supply a specialty raw milk product will be able to form a collective" Professor Allan Fels, chairman of the Competition and Consumer Commission, said in a statement.

The move confirms a draft decision taken earlier. The permission to bargain collectively had been sought by farmers who felt disadvantaged by the impact of industry deregulation. Farmers had argued that large milk processors had forced down prices to unacceptable levels.