Fonterra’s National Milk Services manager, Heather Stacy, said the opening is 8pc up on last season’s record opening milk price, which is in line with indications provided to our suppliers.

“Friday’s announcement sends the strongest of signals to milk suppliers that we will be vigorously competing in this market to retain and grow our long-term milk supply,” Ms Stacy said.

In addition to the record opening milk price, Fonterra has also announced two new milk supply payments – the Seasonal Ratio Payment and the Northern Supply Incentive.

Both payments will be applied to qualifying milk over and above the committed price paid to all of Fonterra’s current and new supply in Victoria and Tasmania.

“We structure our pricing to provide clear and consistent signals to farmers and this is demonstrated by the launch of the new Seasonal Ratio Payment," she said.

"While we have not changed our seasonal incentive rates, the Seasonal Ratio Payment is a further option Fonterra offers that can provide suppliers with up to an additional 40c/kg butterfat and 100c/kg protein.”

The payment is offered as an additional incentive to further grow Fonterra’s supply during the off-peak period.

While it reflects the value to the business of a secure year round milk supply, it also recognises the extra costs incurred by farmers who choose to operate a farming system with a flatter supply curve.

“We are also offering northern Victorian suppliers an alternative region-specific incentive which will deliver up to a further 10c/kg butterfat and 25c/kg per protein above the opening milk price,” Ms Stacy said.

“The Northern Supply Incentive aims to optimise Fonterra’s milk supply in our northern supply region and will support farmers through challenging seasonal conditions.

"We firmly believe the Northern Supply Incentive, plus a competitive milk price, underlines the optimism which is critical to building and maintaining a robust and sustainable dairy industry in the Murray Darling basin.

“We are mindful of the impact of high feed and input costs in all regions and the uncertainty that exists around water supplies for many suppliers.

"To this end our highly competitive and strong opening price will be followed by the movement of cash to suppliers as early as possible.”