MILK processor United Dairy Power (UDP) has set an opening milk price well above key rivals.
The independent processor yesterday set opening payments between $4.88 and $5.19 per kilogram milk solids, depending on the supplier's seasonal production option.
Murray Goulburn announced an opening price of $4.50 per kilogram on Wednesday, Warrnambool Cheese and Butter (WCB) followed yesterday at the same price, while Bega Cheese will start the season at $4.48. Each is between 7.5 and 8.5 per cent below the 2011/12 opening price.
Fonterra will not declare its price until Tuesday.
WCB chief executive David Lord also announced the 2011/12 closing price of $5.48 per kilogram.
"We're pleased to say it is the third highest price we have paid to our farmers," he said.
UDP has processing facilities at Jervois and Murray Bridge in South Australia and Poowong in Victoria.
It is developing a fourth factory at a former National Foods factory in Shepparton.
Managing director Tony Esposito said the company was able to offer a higher price because its output was mainly products for the Australian market.
"We have very little exposure to volatile export commodity prices. It simply doesn't pay to be there," Mr Esposito said.
UDP makes cheeses, including the Caboolture brand, as well as fresh milk and a variety of other products.
Mr Esposito said the company tried to give suppliers an opening price closer to the anticipated season average.
"We keep a bit up our sleeve for step-ups but we try to give our suppliers confidence from the start of the season," he said.
UDP collects milk from Gippsland, northern Victoria, southern NSW, western Victoria and South Australia and takes in about 500 million litres of milk annually.
It has a large amount of spare processing capacity at its South Australian plants and will have more when the Shepparton facility comes on line.
"We're after more suppliers and we are getting a lot of inquiry," Mr Esposito said.
Milk supply manager Cassie Allison said her team was actively recruiting new suppliers in both Victoria and South Australia.
UDP has about 50 suppliers in the south-west.