Farmgate milk prices have hit $10 a kilogram Milk Solids, with Colac processor Bulla Dairy Foods pushing the price to a new record high.
Opening prices had to be locked in by the end of June and Bulla, which was the first processor to announce a figure for the upcoming season of $7.40-8.00/kg MS, closed out the financial with a range of $9.40-10/kg MS.
Bulla was one of several processors who edged further towards the $10/kg MS, as June 30 approached.
Bulla's procurement general manager Rohan Davies said the company was confident it now had sufficient milk supply.
He said the company also believed it could absorb some costs, including the elevated milk price.
"We can absorb some of those costs, but there will be a flow through to the shelf," Mr Davies said.
"There have been big increases in input costs, across the board, and in other areas over the last 12-18 months
"Now the milk price is going up on top of it.
"There will be an increase in price - there has to be because we can't absorb all of it, but we still have a business shape that works."
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He said rising costs had an effect on Bulla in the past 12 months, with the price of global shipping, fuel and raw materials starting to jump in the past six months.
"We saw a lot of raw material costs start to increase, so there has been a range of things - we see it in our materials, things like chocolate and sugars," he said.
"There does need to be an increase (in prices) in store, as well - it has to work in the marketplace and we just find ourselves in an inflationary phase, across the industry."
He said he believed retailers understood the need for the price increase.
"It's been a substantial increase in the milk solids prices, so for some categories there will be double digit increases," he said.
Retail sales had not yet been affected, with consumers able to absorb some of the increases, he said.
"The next six months will see parts of the market change," Mr Davies said.
Larpent dairy farmer and United Dairyfarmers of Victoria vice president Mark Billing said producers deserved the higher prices, given the amount of work and effort they put into producing such a high-quality product.
"We need to some movement at the retail end, so the pressure is not being felt at one point in the supply chain - we need to ensure there is profitability, right along the supply chain," Mr Billing said.
"Processors have similar issues - labor costs and everything else - that we have on farm, that's why we need to see some sort of movement in the retail price."
But he said he didn't expect to see the higher prices translate into milk growth.
"I think people are a little bit nervous about what is coming over the hill at us, with further costs and the global issues that have an impact at the farm gate," Mr Billing said.
"I still find it outstanding sitting down and doing an income and estimation.
"Last year, compared with this year, is a $2/kg MS difference in one season; it's astronomical."
Most processors had to put high payments into the "front end" of the season.
Mr Billing said as prices rose on the supermarket shelf, he was that would partially be passed back to farmers, later in the year.
A Woolworths spokesperson said the company was set to pay suppliers tens of millions of dollars more for its own brand milk, this year.
""With the start of the new season and increased supply costs coming into effect, we continue to review our retail price," the spokesperson said.
""Farmgate prices are set by processors and the Australian Competition and Consumer Commission previously noted that domestic retail pricing strategies are unlikely to have a direct impact on farmgate prices."
Woolworths had agreed to tens of millions of dollars in wholesale price increases, from milk suppliers in recent years.
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