Australian supermarket chain Coles has signed long-term diary supply contracts with two farmer cooperatives Devondale and NORCO.

With these two agreements, the retailer has secured the milk supply under Coles Brand in the states of New South Wales, south east Queensland and Victoria.

Devondale has assured the ten year supply, while Norco’s agreement expires in five years of service implementation.

The agreements will be implemented starting mid-2014, following the expiry of its existing contracts with other suppliers in the respective states.

Commenting on the developments, Coles merchandise director John Durkan noted that these agreements assure its customers of fresh milk and affordable prices in the future.

"Our job is to provide a quality product at a competitive price and at the same time ensure that the dairy industry supplying Coles is strong, innovative and customer focused," elaborated Durkan.

"As well as new supply opportunities for many dairy farmers the new contracts will also see Devondale and Norco invest significantly in existing and new processing facilities to create modern and highly efficient production plants."

Also, the company stated that these contracts include the rise and fall clauses like its other contracts ensuring transparency between price paid and farm-gate price.

Meanwhile, as part of its contract with Devondale, the retailer is set to reintroduce supplier’s branded fresh milk, exclusively to its customers.

Coles is also set to launch Devondale-branded cheese in June 2013.

Devondale managing director Gary Helou stated: "We expect this agreement will lift prices at the farm-gate and our expansion will mean additional supply opportunities for members and farmers throughout Victoria and Central New South Wales."

Coles, however, made no changes in the supply agreements of other states of Australia.