The co-operative reported its total milk intake for the year fell 22 per cent, with a total of 2.7 billion litres in 2017.

In its report, the company stated it had a “difficult and challenging year” in 2017.

The company will freeze all spending immediately.

In an announcement to the ASX on Tuesday morning, the nation's biggest milk processor said its sales dropped 10.3 per cent to $2.49 billion. Sales from its flagship Devondale brand fell 14 per cent, or $502 million, to $1.02 billion.

The headline result was heavily impacted by one-off costs of $405 million associated with the axing of the company's controversial milk supply support package.

The company announced an underlying net profit of $34.7 million but will pay no dividend. Gearing jumped from 29 per cent to 37.7 per cent.

In July, the company indicated it would have a total milk intake of 2.3 billion litres. That was a reduction but would not impact on the expected opening average farmgate milk price of $5.20 a kilogram of milk solids.

At the time, it forecast a final milk price of between $5.20 and $5.50 a kilogram of milk solids, although it warned that if the dollar remained elevated that could jeopardise that price.

Now the company is signalling it will pay more than $5.20 but will need to access $100 million from its profit-sharing mechanism to do so.

Murray Goulburn chief executive officer Ari Mervis said the company had experienced a difficult year due to the significant reduction in milk intake and adverse seasonal conditions.

He said a number of important initiatives had been undertaken to mitigate these issues.

“These include implementing the manufacturing footprint review, de-recognising the contentious Milk Supply Support Package (MSSP) and delivering on previously announced cost out initiatives,” Mr Mervis said.

“Furthermore, a new management team is now in place and a comprehensive strategic review covering all aspects of MG’s strategy and corporate structure, including the Profit Sharing Mechanism and capital structure, is accelerating.”

Mr Mervis said the company had received a number of proposals from third parties, including whole of company transactions.

“The board has requested Deutsche Bank to seek more detailed proposals from these and other relevant parties so as to enable MG to assess the merits of such proposals," he said.

"MG will consider any such proposals having regard to the overall interests of MG’s business and its suppliers, shareholders and unitholders including: the ability to pay a higher FMP on a sustainable basis, value implications for shareholders and unitholders, the ability for MG to access capital as required into the future and the impact on co-operative principles.”

Mr Mervis said 2017 had tested the strength and resolve of Murray Goulburn and its suppliers.

“The coming months will be pivotal for the future of the business as the board and management finalise substantial business improvement programs and third parties are given an opportunity to submit formal proposals to the company.”

Murray Goulburn is considering debt funding milk price payments by up to $100 million.

In a document addressed to the company’s directors, maintenance of milk supply is described as vitally important.

“If Murray Goulburn competitors paid milk prices across FY18 consistent with their current announced prices and Murray Goulburn failed to pay (at a minimum) milk price of $5.20/kg MS, Murray Goulburn would not be paying a competitive milk price (or the gap between its milk price and the industry price would likely be considered unacceptably wide by Murray Goulburn’s suppliers).

The letter states any further significant milk loss would “clearly not be in Murray Goulburn’s best interests”.