Dairy processor Parmalat has announced what its national milk supply manager Matt Morrow says is a simplified pricing model.
Mr Morrow told suppliers the processor was offering a single 6/3/3 payment structure, which would help farmers who produced a significant off-peak milk profile.
"In the past year, we have witnessed, across the eastern seaboard of Australia, some of the worst drought conditions in recent memory - with a corresponding escalation in feed prices and the cost of water," he said.
"In the interests of providing some confidence in the face of these challenges, our aim is to provide reliable and consistent pricing signals through a simplified structure."
The structure comprises the January to June off-peak months, July to December shoulder months and September to November spring months.
A fat to protein ratio of 1:15 would be offered and there would be a four-band productivity incentive.
The incentive ranges from 12-50 cents a kilogram for fat, and 18-75c/kg for protein.
Northern suppliers would be offered different pricing, based on product sold in northern markets, NSW and Qld (domestic) and Victoria (state).
Mr Morrow said that reflected the long-term reality that milk from the region was increasingly being used in the daily fresh product market, in NSW and Queensland.
Mr Morrow said Parmalat would guarantee a domestic minimum milk price of $6.50/kg MS from July 1, 2019 to June 30, 2020; that included a guarantee of 30c/kg MS from market support.
"If retailer market support continues as a separate distribution and is greater than 30c/kg MS, then the higher support figure will be paid each month," he said.
The Parmalat Domestic Milk guaranteed price would be the same for every month, a flat payment of $6.50kg/MS. "In future years, as the Qld and NSW prices are adjusted, the domestic price would reflect the same movement, less any change in freight, and calculated at the start of each season," he said.
The domestic milk price would be fixed for a year and would not qualify for any price movements.
"However if the Parmalat Victorian opening milk price is higher than the domestic milk price, then the domestic price component is adjusted to the opening price level and fixed for that year."
The remaining 50 per cent state milk will be paid as the Victorian milk price, plus any market support available.
Fonterra has announced its suppliers will again have the option to reduce their exposure to market volatility and assist them to budget by locking in up to 70 per cent of their season's milk at an agreed price, before the season starts.