A dairy farming leader has described the lift in Fonterra's forecast milk payout as an early Christmas present, after a challenging spring for the co-operative's suppliers.
Fonterra has increased the milk price by 25 cents to $5.50 per kilogram of milk solids, and left the additional dividend payment at 40 to 50 cents a share.
Fonterra is basing its revised payout on an average increase of almost 18% in the Global Dairy Trade auctions since August.
It also announced it's lifting the advance monthly payments to farmers by 40 cents a kilogram. The advance payment is topped up once the final milk price for the season is decided.
Federated Farmers dairy chair Willy Leferink says the increased milk payment would bump up the average dairy farm income by about $30,000 and comes at a good time.
The lift in the forecast milk price brings it back to where it started at the opening of the season, although it is still 58 cents a kilo below last season's final price.
Mr Leferink thinks the trend in international dairy prices is positive, and with world supply tightening again he says there's the chance that 2013 could be another year "out of the box" for dairy farmers.