Labor has committed to set a minimum milk price if the party is elected at the federal election.
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Whitlam MP and shadow minister for regional services Stephen Jones said he supported a floor price to help struggling dairy farmers.
"We don’t want to be in a position where we’re importing powdered milk because the farmers have gone to the wall," Mr Jones said.
"The drought and the $1 milk was not the beginning of the problem but it has all been perfect storm."
Mr Jones said setting a floor price should not be left in the hands of the government or a minister but rather an external body.
"We should give it to an independent body to find out what the cost of production is and what the regional market is. We’ve had similar systems in place in the past," Mr Jones said.
"Just as important as that is having a mandatory industry code, which provides more information and bargaining rights to farmers."
"They’re basically at the mercy of the processes because it's not like they can store milk then put it on the market. We’ve got to have some sort of rules to give the farmers a better deal."
Mr Jones addressed parliament about the price of milk and a mandatory dairy industry code on Wednesday.
Labor attempted to initiate a vote to require the Australian Competition and Consumer Commission (ACCC) to set a minimum milk price, however the vote was lost 69 to 74.
The debate comes after Woolworths stopped selling its $1 a litre milk on Tuesday, and increased the price by 10 cents with the money to go back to dairy farmers.
Coles has refused to budge on its $1 per litre milk, citing cost of living pressures for its customers.
ALDI has not committed to the change in milk prices, as low prices central to its business and it did not agree to bypass the normal supply chain.
