Dairy Connect CEO Shaughn Morgan welcomed Wednesday's announcement by supermarket chain ALDI that it had recently lifted the retail price of its fresh milk range while maintaining its 10 cents a litre ex-gratia payment program to its dairy suppliers.

An ALDI Australia spokesperson said the latest price rises were a direct result of increased farm gate milk prices negotiated between producers and the supermarket's wholesale milk suppliers.

Mr Morgan said Dairy Connect supported the ALDI price increase and called on the other big retail players, Coles and Woolworths, to follow suit.

"The ALDI statement confirms our long-held belief that the farm-gate price paid to dairy farmers has been too low and reflected commercial 'market failure'," he explained.

"It's important to ensure that as much as possible of the ALDI price increase flows through to the farmers.

"Given the decision by ALDI to increase the retail price of milk, we call upon Coles and Woolworths to follow the lead."

Chair of the Dairy Connect farmer group Graham Forbes said relationships along the supply chain needed to be restructured to assure viability into the future.

"Retailers, processors and farmers all need to be successful because there is a risk that Australian consumers will soon be drinking imported milk," he added.

"We need to ensure a 'win-win' for all because, with the large number of dairy farming enterprises closing on a weekly basis, Australia is on the verge of importing foreign milk."

ALDI said the chain did not take price increase decisions lightly, however these movements were necessary for building a long-term sustainable Australian dairy industry.