Xenophon calls for action on 'milk crisis'

Independent senator Nick Xenophon is calling for an emergency temporary levy on milk and stronger protections for dairy farmers after savage milk price cuts.

Dairy co-operative Murray Goulburn has slashed what it pays farmers for milk solids from $5.60 a kilogram to between $4.75 and $5 a kilogram because of a slump in global prices.

Competitor Fonterra has followed suit.

Senator Xenophon also wants stronger protections for dairy farmers against "abuses of market power", an inquiry into the industry and for the commonwealth to use local milk powder in foreign aid.

"They (dairy farmers) deserve to make a decent living and a fair return on their investment. Right now many of them feel as though they're feudal serfs," he said on Friday.

"If we don't act now the dairy industry with its 6000 farmers will shrink to a level from which it may never recover.

"And then we could be relying on long-life milk from other countries that have been smarter than us in ensuring a viable dairy sector."

South Australian Agriculture Minister Leon Bignell earlier this week announced $60,000 for financial and mental counselling for distressed farmers.

He also urged consumers to vote with their wallets and avoid companies that were "ripping the guts out of the milk price".