Australian supermarket group Coles has signed contracts with two dairy farmer co-operatives, which the retailer says is a “major win” for farmers.

Wesfarmers-owned Coles has agreed deals with Murray Goulburn’s Devondale and co-operative Norco to supply milk in south-east Queensland. The ten- and five-year deals respectively will supply Coles with private-label milk from July 2014.

Coles said the new contracts will provide a better deal for thousands of east coast dairy farmers including long-term contract security and higher farm gate prices.

“The new contracts are a major win for farmers because we cut out the middle man and farmers get a bigger share of the retail price. It is also a win for consumers because we can sustain affordable milk prices,” the retailer said.

In addition to the supply opportunities, the contracts will see Devondale and Norco invest “significantly” in existing and new processing facilities to create “modern and highly efficient” production plants, Coles said.

“The new Devondale plants will result in even faster deliveries of fresh Australian milk for customers.”

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Devondale MD Gary Helou said: “This is a ground-breaking agreement for the Australian dairy industry and the most significant investment in new processing facilities since the industry was deregulated in 2000. We expect this agreement will lift prices at the farm-gate and our expansion will mean additional supply opportunities for members and farmers throughout Victoria and Central New South Wales.”