Quarry Store owner Heather Hannagan said she had been breaking even on the deal she negotiated with Meadowfresh three months ago and has been selling milk at $1.50 a litre, at least 50c lower than many of her competitors.
When the initial three-month deal finished at the end of April, she was told it would roll over for another three months, provided there was no increase in the price of milk in the meantime, she said.
Customers were advised accordingly.
Last week, however, Meadowfresh told her the deal could not continue beyond the end of the week, even though there had not been an increase in the wholesale cost of milk.
"I feel really let down.
''I was trying to do something for the community and it backfired."
Ms Hannagan said she had been keen to keep down the cost of milk because she served many families with young children in her community, which was not an affluent area.
She believes the change in the deal is the result of other dairy owners seeking the same terms, but Meadowfresh salesman Malcolm Wilson said he was not prepared to say he was under pressure from other dairies.
The deal with Mrs Hannagan had been part of a North Dunedin promotion.
He said he did not know where the suggestion of a three-month deal came from.
There had not been a time placed on the arrangement and the price was subject to regular review as market forces moved.
He had told her he would keep the deal on as long as he could, but there were no " time frames on any deals".
Ms Hannagan said she would not have told her customers the deal was continuing - subject to the wholesale price being stable - for three months if she thought there was any doubt about it.
Mr Wilson said the new deal would allow her to sell two litres of Dairyfresh milk at $3.30 which was still a "very competitive price" since its recommended retail price was $5.
He had "bent over backwards" to give a good deal to Ms Hannagan, who has only been in the store nine months.
After Ms Hannagan negotiated the original deal, the same offer was made to the other dairy in Northeast Valley, Jumbo Dairy.
It, too, will not have the $1.50 a litre milk available, but the owner did not wish to comment yesterday.
