Bulla Dairy Foods, which moved to direct farm supply about two years ago, has become one of the leading price setters for the farm gate.
The company, which has factories in Colac, Dandenong and Mulgrave and manufactures chilled and frozen dairy foods, set a $7/ kg price in May but moved to $7.20 in June.
Bulla chief executive Allan Hood said the company examined market prospects and realised that competition for milk had increased.
“Our business is in growth and we have based that growth on increased supply of quality milk,” Mr Hood said.
He said the Bulla name continued to be the top cream brand in Australia.
The company has just over 100 suppliers from around Victoria providing an average between 1 million to 1.5 million litres.
Asked about the cost-price pressures on farmers, Mr Hood acknowledged the industry was facing a tough time and said the company had lost some suppliers in the last couple of years when farmers decided to exit the industry.
“Hopefully next season we will see a stronger year and costs may become more affordable.”
The company will pay a flat $7.20/kg milk solids through the year, providing a cash boost in the spring, when some processors pay a reduced rate.
Bulla applies no stop charge, volume charge or collection charge, so farmers receive 100 per cent of the price. The company also applies a flat payment model to improve farmers’ cash flow through spring.
“We have been procuring milk and cream for more than 108 years in regional Victoria thanks to the continued support from farmers and the consistency of their excellent milk supply,” Mr Hood said.
The company employs about 700 people.