JAMBEROO dairy farmer Lynne Strong said the shake up in Australia's fresh milk market was the most exciting thing to happen to the industry in 15 years, affording farmers far greater confidence.
Mrs Strong, a sixth generation dairy farmer and international dairy farming advocate said milk prices "had never been better" and that she could already see farmers bouncing back.
Woolworths has matched Coles in offering longer contracts to its designated home-brand milk suppliers.
In addition to this, Woolworths has imposed new restrictions on milk transport and marketing across state borders.
Italian-owned milk processor Parmalat, the winners of Woolworths NSW and Queensland contracts for private label milk supply, have agreed to only buy, use and process milk destined for Woolworths supermarkets from within their own state of origin. The Queensland contract is for 10 years and NSW's for two years.
Parmalat will pass on the negotiated contract term to all its farmers to match the terms of the Woolworths deal.
Mrs Strong said this allowed NSW farmers to plan over a longer period with more certainty.
Parmalat will also offer a rise and fall clause to reflect industry input cost movements.
"This is good news as we continue to grow our NSW farmer base and we are receiving many new farmers onto our books," Parmalat chief executive Craig Garvin said.
"We want to work closely with our farmers for the long-term and NSW continues to be a key growth region for us.
"We have an excellent milk supply base that we will continue to build on."
Mrs Strong said these developments would benefit Illawarra and South Coast farmers, as the contracts were game-changers.
"It protects the farmers in each state," she said.
She said a rise and fall clause in the farmers' contract meant for the first time fluctuating on-farm costs could be shared with the processor, rather than be borne solely by the farmers.
On top of this, she said the opportunity to enter into long-term contracts offered processors and farmers long-term security, and the opportunity to grow, innovate and employ.
"This new confidence in dairy is vitally important for our community, which is so reliant on our farmers to maintain our beautiful landscapes, employ our young people and spend money locally," Mrs Strong said.
"It's probably the most exciting thing that has happened in the dairy industry for 15 years and already I can see the farmers bouncing back.
"Our neighbours are growing their businesses, their children are coming back to the farm and we have a number of farms in the region being managed by young people under 35."
In an unusual scenario, this region was in severe drought from October 2012 until March 2013, she said.
However, she described the weather conditions in the same period during late 2013/early 2014 as "magical" and "as close to perfect as we are likely to get".
"Every time it looked like it could get a bit dry, it rained that night," she said.
"In recent weeks we've had some really heavy rainfall. But the grass cover was good enough to handle the flood and the paddocks recovered very quickly."
Meanwhile, varied weather conditions throughout NSW have resulted in the state's farmers reporting mixed levels of confidence in the latest quarterly Rabobank Rural Confidence Survey.
Conditions eased in February, with rain across much of NSW.