More than 9000 tonnes of NZ cheese has been dropped from Australia’s Coles supermarket chain in favour of a new “Australian First” policy.

Up until now Coles has been in partnership with New Zealand cheese suppliers, providing Australia with around 50% of the cheese used in its generic brand, but has now decided to switch to a supplier closer to home.

Southern New South Wales co-operative Bega Cheese has been chosen as part of Coles’ 'Australian First' policy.

The five-year contract signed with Bega, has earned high praise from Aussie dairy farmers.

Bega Cheese chief executive Aidan Coleman said that the contract with Bega would inject an extra $30 million Australian ($38.4 million NZD) directly into the Australian dairy industry.

Mr Coleman says the new contract with Coles means they will be sourcing additional milk from 400 dairy farmers across New South Wales and Victoria.

He said they will also have to  approach up to 70 farmers who don't currently supply Bega and invite them to become part of its milk network.

The production of the Coles brand cheese starts in February.