English dairy farm producer organisations planned
New rules allowing dairy farmers to form producer organisations are being planned in England.
Defra said the rules would allow producers to have more influence over contractual terms, conditions and prices.
Farmers would collaborate to sell their milk to processing companies, rather than negotiating as individuals.
The plans have been launched on the Isle of Wight by farming minister David Heath.
"England's dairy industry is world leading yet still has so much potential to expand, and I'm convinced that better industry collaboration is the key," the Liberal Democrat said.
The plans are part of a six-week consultation on how to implement the European Union's dairy package in England.
Scotland, Wales and Northern Ireland will hold their own consultations.'Huge potential'
Mr Heath made the announcement at a rural roadshow on the Isle of Wight where he visited the Isle of Wight Dairy Farmers Ltd.
This producer group, made up of the majority of the island's dairy farmers, supplies Isle of Wight-branded milk to about 30 retailers across the island, including supermarkets and local shops.
The UK currently imports £1.2bn more dairy produce than it exports, and has "huge potential" for growth in domestic and export markets, according to Defra.
It said producer organisations could cover up to a third of UK production and would negotiate on behalf of members.
A £5m dairy fund, offered through the rural development programme for England, has also been launched which will allow groups of dairy farmers to apply for £25,000 minimum grants to help develop producer co-operatives and invest in technology.
UK dairy farmers and processing firms reached an agreement on a voluntary code of practice for future contracts for milk supplies in September.
It followed a series of protests and blockades staged by farmers against declining payments.