The northern New South Wales co-op is paying its dairy farmers between 52 and 53 cents per litre for tier 1 milk, and on average 42 cents for tier 2, its manufacturing milk, reports ABCRural

But the co-op's chief executive officer, Brett Kelly, says the price isn't anywhere near where it should be.

"What farmers have to pay out and with increasing input costs, they need to be well above the level they're getting paid now and I think we've got to really, seriously, look at that long-term strategy," he said.

"Not just from a farm, consumer, retailer point of view, but from a consumer point of view. We need to have our farmers around in the long run."

"We're obviously doing probably a lot better than others in terms of a co-operative owned processor however the price is not enough, it's not sustainable."

Dorrigo farmer Adam Darley supplied 2.5 million litres of milk to Norco last year, averaging 54 cents per litre.

He says that price is extremely good but production costs are on the rise.

"Electricity is just absolutely unbelievable. We're nearly topping $7,000 a quarter just in electricity," said Mr Darley.

"Because the last couple of years have been wet, we've been fortunate that some of our input costs have dropped, where some have gone up, so we're probably staying at a par on input costs just at the moment."