Two of the country's largest dairy companies have raised the advanced milk payment to suppliers and farmer cashflows are benefiting.
Open Country Dairy (OCD) chairman Laurie Margrain said his company was the first to move three weeks ago when it lifted the interim payment to suppliers by 20c a kg of milk solids (kg/ms) to $4.50.
A review this week is likely to see that increase further.
A week later, in early November, Fonterra raised its advance payment by 30c a kg/ms, but a spokesman said it had nothing to do with OCD's earlier move.
At the time of the announcement, Fonterra chairman Sir Henry van der Heyden said the higher advance payment was possible because the season was progressing well and the co-operative has firmed contract rates and prices.
Mr Margrain said this was competition at work, and farmers were the winners.
"That's what competition does, as one company ups the game, others will follow."
A further review by OCD next week could see the advance rate go up even more.
Mr Margrain said the OCD board has vowed to at least match and possibly exceed Fonterra's advance rate, and this would be discussed next week.
A strong start to the season and improvement in working capital had allowed OCD to increase its advance rates, he said.
Mr Margrain confirmed OCD was not interested in buying the New Zealand Dairies processing plant at Studholme, which last week was put on the market by its Russian owners, Nutritek.
