Industry leaders say the draft code backtracks on its initial purpose, to empower producers when cutting a deal for milk price contracts, and it appears likely it will need a significant overhaul if its to gain a working industry consensus.

Finley dairy farmer Ruth Kydd said if it wasn't for her membership with Dairy Connect, she wouldn't have been able to fully understand the draft.

"Luckily we have a legal team who are able to spell it out for us, but we still haven't gone through it all and to be honest I don't fully understand it as it stands," she told The Border Mail.

"It needs to be a lot clearer for farmers who don't have that support person who can go through it with them.

"If farmers can't understand it what happens if they can't meet their contractual requirements, how are they meant to know what happens then?"

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Previous Agriculture Minister David Littleproud developed the dairy code policy in the lead up to the May 18 election, with a commitment to write the policy into law by July 2020.

Last month current Ag Minister Bridget McKenzie promised to bring forward by six months the deadline to enact the new code.

Her pledge was made to placate One Nation Senator Pauline Hanson, who threatened to withhold her vote from non-essential legislation unless the government did something to support dairy farmers.

But Mrs Kydd said there are a "few clauses" she has an issue with.

The most controversial element is a clause that allows processors to renegotiate contracts, potentially lowering farmers prices, if they are impacted by circumstances that are "beyond reasonable control".

"That needs to go both ways," Mrs Kydd said.

"There are things that are beyond reasonable control that happens on dairy farms too, but there is no clause which gives the power back to farmers in that instance."

Senator Hanson has called for Senator McKenzie to resign.

Senator McKenzie rejected the accusation the code had been watered down.

She said a floor price created "false hope" that one policy measure could solve the myriad problems impacts farmgate returns, such as processor contracts and rising input costs from electricity and water.

"Setting a minimum farmgate milk price would do nothing to fix the current power imbalance between dairy farmers and processors and would do nothing to drive down input costs," Senator McKenzie said.

NSW Farmers dairy committee chairman Colin Thompson said a code of conduct on its own was not enough to make the dairy industry economically sustainable for producers, in the long term

"We need some kind of intervention now to turn things around and put industry on a more sustainable footing," he said.

United Dairyfarmers of Victoria vice president John Keely, said a mandatory floor price would not be viable for farmers whose produce is exported.

"From an exporting states' perspective, in Victoria and Tasmania, we are competing on a world market. If the floor price is above the world market, the processors won't hang around, there'll be nothing in it for them," he said.