Fonterra has raised expectations of an $8 payout to farmers for every kilogram of milk solids produced next season.
The dairy cooperative on Tuesday forecast a payout of $6.60 for the 2010-11 season, 50 cents more than last season.
Fonterra expects to top that payout up with a dividend of 30 cents to 50c per share held by its 10,500 farmers to between $6.90 and $7.10 per kilogram of milk solids.
Robust global demand for dairy products is behind the stronger forecast.
Fonterra chairman Sir Henry van der Heyden says if the exchange rate and prices for dairy products on world markets holds, the payout could be well over $8.
Shareholders Council chairman Blue Read says the increased forecast is a real confidence booster for farmers and reflects what is happening in the market at the moment.
However, he warns farmers do need to remain cautious while planning their budgets for next season.
Meanwhile, Fonterra has confirmed a payout between $6.50 and $6.60 per kg of milk solids for the current season.
Westland Milk Products is meeting on Tuesday and expects to confirm its second highest payout to its shareholders after what it says has been a much improved season.
Chief executive Rod Quin says Westland has been forecasting a payout of $6 to $6.30 per kilogram of milk solids to its 330 shareholders.
Mr Quin says Westland has had a turn around after a shocking 2008-09 season, when it had to bolster its payout with retention money just to make $4.50.
Westland Milk Products expects to retain about 30 cents of this year's payout, he says.