Bega Cheese has sought to bridge the milk price gap between the south and north in announcing its third step-up since opening nearly a month ago.
Chairman Barry Irvin has told suppliers Bega will increase its average milk price by 20 cents, to $7.14 a kilogram milk solids, for southern Victorian and south-east South Australian farmers.
Bega lifted its opening milk price just ten days after announcing it in early June.
The last increase took the price to $6.94/kg MS for southern Victoria and south-east Australia and $7.09/kg MS for northern Victoria and the Riverina.
"While competition for milk in northern Victoria has been very strong in recent years, with large volumes of milk now supplying NSW and Queensland markets, that competition has not extended to all Victorian milk supply regions," Mr Irvin said.
Given the expanded competition, Bega had decided to more "closely align" its southern Victorian and south-east South Australian prices to those in northern Victoria and the Riverina.
"Since revising our opening milk prices on June 10, we have been carefully reviewing the market for our products and the continued strong competition for milk supply," Mr Irvin said.
"Whilst market fundamentals remain stable for our product returns, the competitive market for milk supply is very strong with many companies adjusting their milk prices over recent weeks, impacting our competitive position.
"It is very important to us to not only reflect the market for our products, but also ensure our suppliers in southern Victorian and south east South Australia have a competitive milk price offering."
Read more: Milk price clarification call
Last week Saputo Dairy Australia advised its suppliers it has increased its minimum milk price by 10 cents, effective from July 1.
It joined Bulla and Lactalis, who also announced price increases.
Bena Bega supplier dairy farmer Bruce Glasgow said he was pleasantly surprised by the announcement.
"We can't change a lot, as far as this season goes," Mr Glasgow said.
"Next year, if there is a good season, there will be more capital expenditure.
"It's not like you can turn on the tap and ramp up production to take full advantage of it."
Mr Glasgow, of Derryvale Dairy, is currently calving down his herd.
"We are cautiously smiling, I would sooner a longer term price of $6 50 to $6.75/kg MS, rather than a high flier of above seven and then come back to six in two years time."
Bega offers a 9/3 payment system, with a differential price between the spring months (September to November) and the remainder of the year.
"Being seasonal, we don't get much of a milk cheque in June," Mr Glasgow said.
"The first couple months of the season are pretty tight, but the early season price is very attractive for us, as far as cash flow goes."
He said he understood why processors had paid more for northern Victorian milk.
"I would like to think if we had an ordinary year, they would do the same for us," he said