“This increase reflects conditions on global commodity markets, where despite some recent softening in demand, prices continue to be above the US$3000 per tonne mark,” said Fonterra national milk services manager Heather Stacy.

The increase will be backdated to the start of the financial year, and raises the company's average annual price to 426c/kg for milk solids (i.e. 12c/kg butterfat and 30c/kg of protein).

“Fonterra’s farmgate price has increased by around 18 per cent since the start of the season, which equates to an additional $74 million put in the pockets of our 1300 dairy farmer suppliers," Ms Stacy said.