It is the company's third step up for the season and is higher than its rivals.

A comparison of prices conducted by The Standard revealed Saputo will pay $7.05, while Fonterra has offered $6.95 and Bega $6.90.

This is a far cry from the prices paid at the height of the milk crisis several years ago, with some companies paying less than $5 per kilogram of milk solids.

UDC spokesman Andrew Wellington said the price rise came on the back of strong demand for the company's premium ingredients locally and abroad.

"It's a good outcome for everyone," Mr Wellington said. "The step up of 25 cents is due to strengthening market conditions since October.

"There was a bit of a slow start to the season, but our product returns improved globally and really started to gain steam from October through to December - and it's held very firm.

"We also gained a lot of ground with regard to operational efficiencies across the business, which has been a real achievement."

Mr Wellington said the company was thrilled to be able to reward suppliers for their trust in and commitment to UDC.

"The step up takes the UDC factory average to $7.20 per kilo of milk solids, which is exclusive of any sign on bonuses or loyalty payments," he said.

"While this is a strong price locally, what we're really happy about is that many suppliers are taking advantage of the performance-based milk model we released for this season, which effectively lifts UDC's factory average well above $7.20."

He said the model incorporated an incentive-based system.

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