The company announced an increase of eight cents per kilogram of butterfat and 20 cents per kilogram of protein for the 2013/14 season, bringing its average farmgate price to $6.80 per kilogram of milk solids (kgms).

The increase brings the company's milk price into the lower end the $6.80 to $7.00kgms range of Fonterra's forecast closing price for the season.

Fonterra Australia managing director Judith Swales said while commodity prices were coming off record highs due to increased global production, international demand remained strong, maintaining prices above long term averages. 

Bonlac Supply Company (BSC) chairman Tony Marwood welcomed the step up.

"It's great to see we are in the closing price range already."

Ms Swales said the company would be launching new initiatives for suppliers in coming weeks.