Fonterra Australia has announced a milk price step up of 15 cents a kilogram milk solids.
The step up, with payment to be made on February 15, takes its average farmgate milk price to $9.55/kg MS.
It comprises 13 cents/kg of butterfat and 18c/kg of protein.
The step up comes as processors fight to hold onto their share of Australia's shrinking milk price pool.
The latest production figures released by Dairy Australia last week reveal production this season has fallen 7.1 per cent.
If the trend continues, Australia's production for 2022/23 will fall below 8 billion litres for the first time in 30 years.
Fonterra's milk collections in Australia were down 2.8pc for the six months to December compared with the same period the previous year.
December collections were down 3.2pc.
In its Global Dairy Update, the company blamed the impact of record spring rainfall for the fall.
Fonterra Australia managing director René Dedoncker said the company had been able to lift prices as it had captured strong commodity prices for its cheese contracts in the first half of the season.
"Despite lower than forecast milk collections and inflationary pressures, demand for our domestic brands and products remains strong and our Australian business continues to perform well," he said.
"As always, we will continue to watch the market closely and will keep you updated on market conditions as we round out the season."
Global dairy prices rebounded this week, as the Chinese economy opens up with the removal of COVID-19 restrictions.
Tuesday night's auction saw broad-based increases with milk fats leading the charge.
Butter was up 6.6pc, anhydrous milk fat 4.8pc and butter milk powder 2.0pc.
Cheddar rose 2.3pc, while the key whole milk powder index lifted 3.8pc.
The Fonterra announcement follows one by Coles this week that it was offering long-term contracts to dairy farmers in a bid to lock in supply.
The Union Dairy Company (UDC) and Australian Dairy Farmers Corporation announced step up to their milk prices in November.
The step up took both processors' average farmgate milk price to $9.90/kg MS.
Opening prices this year hit record levels, 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 season of $7.40-$8.00/kg MS, closed out the financial year with a range of $9.40-$10/kg MS.
All major Victorian processors offered more than $9/kg MS.
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Carlene Dowie
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
