Managing director Stephen O'Rourke advised that a step-up of $0.30 per kilogram protein and $0.12 per kg butterfat would be paid with the November milk payments.

"This increase in farmgate milk price represents the payment of approximately A$50 million to our suppliers,'' Mr O'Rourke said.

"This directly benefits rural communities and the Australian economy.

"With improved spring rains, pasture growth, water allocations and lower grain prices, we hope that our dairy farmer suppliers can see significant improvements in their farm budgets and build their confidence in the underlying strength of dairy food production for Australian and world markets.''

Mr O'Rourke said that the co-operative and its dairy farmer suppliers had been hit hard by the global financial crisis and a 60 per cent decline in the prices for major traded dairy products such as milk powders and cheese which occurred late in 2008.

"We are pleased to see a firm recovery in world dairy prices over recent months,'' he said.

"However we maintain some caution as world economic conditions remain uncertain and can change quickly.''

Mr O'Rourke indicated another step-up in payments may be possible in December.