CONCERNS were sparked late last week, when a note from Lion Dairy and Drinks appeared in supermarkets in NSW, Victoria, and South Australia.
It explained some milk lines were in short supply because: "Extreme weather conditions - including drought, together with significant cost increases across water, feed and energy - have contributed to the challenges facing dairy production in Australia which has resulted in lower milk supply."
NSW Farmers dairy committee chairperson Erika Chesworth sighs when asked about the industry's outlook.
"We've been saying for some time now that it is critical and in crisis," she says, "and this drought has simply shown us just how vulnerable our farms are. It's like pulling a scab off a wound.
"Water policy is failing farmers, and people have been eroding their capital to stay in the business since 2011," she said.
It's a sentiment former Bega dairy farmer Aaron Tyrell - who is now based at Invergordon, Victoria, and is also a Lion supplier - can relate to.
"We were milking 240 just before Christmas and producing about 6000 litres a day, now we're at 2000 litres every second day," he said.
Mr Tyrell has been culling his herd, retaining only the best performers and next week he'll be looking at drying off his remaining herd of about 160 to sit and wait to see if it has rained by the time they calve.
"We haven't been pushing a lot of feed into the cows, because you still have to pay for feed," he said.
It's a classic case of scaling back production to ease running costs.
His main gripe is the price of temporary water, which this week is at $600 a megalitre.
That is one of the reasons NSW Farmers is advocating for researching what the NSW inland can do for Australia's eastern seaboard milk supplies.
"Parts of the inland have excellent water security and soil quality," said Ms Chesworth.
Among the many problems facing the dairy industry at the moment is a huge disconnect between producers and processors, she said.
"The majority of milk produced here is controlled by boards that don't sit in Australia." She said $1-a-litre milk had had a huge impact on the industry.
Meanwhile Mr Tyrrell is holding out hopes for both a milk price increase and some good rain in the near future.
"We're hearing the price could be better and it could be announced as early as next month," he said.
"But if it doesn't rain we're all stuffed."