Dairy farmers have cautiously welcomed the establishment of a support fund by Coles in the wake of cuts to farmgate milk prices.

Twenty cents from the sale of each litre of specially branded milk will be paid into a fund, which will be overseen by an independent committee.

Murrabit dairy farmer and Murray Goulburn supplier Andrew Leahy said it was a “lovely gesture” from the supermarket, but it remained to be seen whether consumers would choose to buy this milk over cheaper options.

He said farmers were also not aware of the details of how and where the money would be distributed.

Mr Leahy said he would like to see supermarkets also raise the price of their cheapest milk, as well as other dairy products, such as yoghurt and cheese, to boost the dairy industry.

“But it’s good the supermarket has seen there is a problem,” he said.

The Victorian Farmers Federation has welcomed the move.

The organisation and its dairy arm, the United Dairyfarmers of Victoria, will sit on the advisory committee for the fund.

“The dairy industry, like all agricultural industries, is vitally important to the Australian economy, so this initiative is about consumers and industry coming together to support farmers,” VFF president Peter Tuohey said.