NSW Farmers is pushing for the retail price of generic milk brands to be lifted to $1.50 a litre.
It is also pushing for a minimum three-star health rating on all dairy products.
NSW Farmers Dairy Committee chair Colin Thompson said the major retailers needed to lift the price of their generic milk brands to $1.50 per litre to help sustain the NSW dairy industry.
"The end of the $1-a-litre milk prices at the start of the year provided some relief to dairy farmers, but a further price increase is needed to help NSW dairy farmers," Mr Thompson said.
"Feed and water costs are skyrocketing in this unprecedented drought, but our milk prices on farm have only risen slightly.
"A price rise on generic milk brands by the major retailers Woolworths, Coles and Aldi would inject much-needed money back into the industry and to farmers.
"The prices of other dairy products like cheese and butter also need to be lifted."
Mr Thompson said retail milk prices were part of a bigger picture for the dairy sector, and that reforming Australia's competition framework was the ultimate way of safeguarding the industry's future.
"We need to have the power inequities along the dairy supply chain addressed but this will take time," he said.
"A price rise is a short-term option that will provide immediate respite to our farmers.
"We are at a crisis point in NSW, with 51 dairy farmers exiting the industry over the last year, and a drop in overall productivity by 7 per cent."
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The group is also pushing for the minimum health rating to recognise the importance of dairy in a healthy, balanced diet.
Mr Thompson said it was vital for the rich nutritional offerings of dairy products to be reflected in the star rating given to them.
"Dairy products like cheese and yoghurt are a great source of calcium and protein, especially for children and young adults," he said.
"The health benefits of dairy products are scientifically-proven.
"We need to be encouraging everyone to ensure they have their recommended dairy consumption."
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