WCB, which is owned by Canadian dairy giant Saputo, said it would increase its farmgate milk price from $5.75 kgms to to $5.95 kgms.

The increase also applies to dairy farmers supplying the Saputo milk plants in southern Australia that the company bought from Murray Goulburn earlier this year.

The payment is retrospective to July 1, this year. The payment will be made with September 2018 proceeds during October 2018. 

Saputo Dairy Division Australia president Kai Bockman said the increase in the farmgate milk price reflected the positive impact of a weaker Australian dollar, despite a decline in global prices for dairy commodities in recent months. 

“It is not connected to recent developments in relation to the dairy levy proposed by the Minister for Agriculture and Water Resources, although we hope the increased price will provide some assistance to those impacted by continued drought conditions and higher feed and water costs,” Mr Brockman said.

Federal agriculture minister David Littleproud earlier this month backed the idea of a temporary 10 cents a litre levy on fresh milk sold at retailers to help out dairy farmers but said the move would need the support of the retail industry.

Drought conditions in much of eastern Australia have imposed high feed prices on dairy farmers.

While the south-west has not had dry conditions, regional dairy farmers have also been hit by high prices for hay and other fodder because of strong demand from drought-stricken areas.

“We acknowledge the challenges caused by the current conditions and remind suppliers of the finance options that are available through WCB and Saputo Dairy Australia (SDA) that can assist with the purchase of feed and water,” Mr Brockman said.

“I would also like to highlight that our SDA Feeds business is able to support suppliers in the current challenging environment,” he said.