Ms Staley told Victoria’s parliament on Tuesday that the supermarket giant’s decision would have a significant impact on Donald, where the biscuits are made.

“This is a very poor decision, and it will have a significant impact on the township of Donald,” Ms Staley said.

“Kooka’s Country Cookies was established in 1994 largely to provide employment after what was then a run of bad seasons. It has grown from five members of staff to 25 currently.

“This decision by Woolworths will cut their sales by 15 per cent.”

Ms Staley said she had spoken with one of the owners of Kooka’s Country Cookies, Graeme Harris.

“He told me that if these sales are not replaced it will cost five or six jobs in Donald,” Ms Staley said. 

“This is a very special business. Yes, it exists to make a profit and, yes, it certainly makes delicious cookies, but its main focus, according to Graeme Harris and Kelvin Clark, the two owners, is to provide employment in Donald.

“Woolworths making this decision is short-sighted, and it should be reversed.”

Ms Staley’s electorate includes Donald within its north-west corner. Donald is represented on the federal level by Member for Mallee Andrew Broad.

Agriculture and Regional Development Minister and Member for Western Victoria Jaala Pulford has also written to Woolworths and asked it to reverse its distribution cutback. 

Kooka’s announced last week that Woolworths had reduced its distribution of the company’s products to Victoria and Tasmania markets only.

“The Kooka’s team is proud of their products and it is with disappointment that we find we cannot supply to Woolworths customers throughout Australia,” a spokesperson wrote on the company’s Facebook page.

Asked why Kooka’s products would no longer appear on shelves Australia-wide, a Woolworths spokesperson said: “We work hard to ensure we are responding to our customers' buying habits and that the products on our shelves reflect what our customers want to see.”

The spokesman also refuted accusations the company did not support local suppliers. 

“We have a strong history in supporting local Australian suppliers whenever we can,” he said. 

"Our commitment includes using local sourcing managers in each state to regularly identify niche and small opportunity Australian suppliers for supply direct into store.

“We're proud to support the growth of great local Australian suppliers and this commitment is important to us and our customers.”

Buloke Shire Mayor David Pollard said Woolworths’ decision to reduce the amount of product it received from Kooka’s could have flow-on effects.

“Every sale of a packet helps Donald,” Cr Pollard said.

“Even the loss of one job because of a decision like this can have a huge impact. It can cut down spending elsewhere in the town as well.

“The community relies on manufacturing. Without those jobs, these communities wouldn’t exist.”

Kooka’s was on the verge of closing in 2012 in the face of cheaper imports.

The company’s manager at the time called for consumers to support Australian-made brands.

Three years later, the company had turned things around and was looking to hire more staff on the back of its own export contracts to Asia and greater distribution in Australia.