NORCO has begun processing what will be more than 100 million litres of milk a year for Coles after starting its five-year contract to supply the supermarket giant's branded milk.
The Lismore-based dairy co-operative will process the equivalent of 500,000 bottles of milk each week at its Labrador, Queensland facility.
Chief executive Brett Kelly said the co-operative had spent millions gearing up the Labrador factory to meet the requirements of the contract.
"Early on in the process, our board of directors approved capital expenditure of $6.4 million so that management could carry out the factory refurbishment works and purchase the capital equipment required, such as a high-speed rotary filler, additional silos and a new pasteurising line," he said.
"It has been a big project but we have maintained a clear focus all the way through that has led to this big day."
Coles managing director John Durkan said "to sign a contract of this scale and length with an Australian farmers' co-operative is a great outcome for farmers and customers".
"We are delighted ... to give their members in northern New South Wales and Queensland a long-term home for their milk on the domestic market," he said.
Norco general manager Ian Foote said the contract was a "major boost" for the local economy and an extra 22 full time workers had been hired at Labrador.
The start of the Coles contract follows Norco's announcement last month that its dairy farmers are the highest paid in the country, following a three cent/litre increase.
It also announced the first shipments of its milk were hitting Chinese shelves, priced at up to $9 a litre, after a deal was done to speed up a complex quarantine process.
Mr Kelly said this was the result of a new "cold pipeline".