The New Zealand based co-operative has confirmed the extra 20 cents is an increase on the 2019/20 price, announced in May.

"We are offering our farmers the option to take the 20ckg/MS increase upfront rather than receiving it through the season, with the volumes based on last year's milk production," a spokeswoman said.

Fonterra was one of several processors who announced opening prices, earlier than usual

A number of processors have also stepped up prices, before the season officially started on July 1.

Read more: More dairy opening price step ups announced as battle for supply intensifies

Fonterra supplier Chris Griffin, Moe, said offering the increase upfront was also a very good initiative.

"I'm sure there will be a fair few people keen to take that up, as money is pretty tight in many dairying areas," Mr Griffin said.

"You would get that amount, up front, to assist with cash flow."

He said loyalty had gone out the window, as farmers were chasing the best price.

"There is certainly a drift away and people now really do chase the dollar, in a lot of instances.

"Other companies have done similar things; I suppose its a way of trying to retain supply and give them some confidence."

Read more: Potential dairy headwinds but market is generally positive, says analyst

Mr Griffin said the price, and terms, were attractive to his business.

Bonlac Supply Company chairman John Dalton, Naringal, said Fonterra was taking a responsible position, on price.

"There is no doubt this move will help retain some supply, for sure," Mr Dalton said.

"We asked them to come out early and give us a line of sight - which they did - and they are leaving themselves open to their price being overtaken."

He said he'd been to farmer supplier meetings, across Victoria, where the decision had been well received.

Kirsty Keightley, Condah, said there was no doubt the increased price would help Fonterra secure more milk and keep farmers with the company.

"Getting an increase in the milk price is a positive, people are happy with Fonterra," Ms Keightley said.

"With that price, they will stay there.

"This is a record opening price, nev"er before have we seen opening prices as we have now."

Every farmer had to make his or her own decisions on whom they supplied.

"The important thing is that it's a positive price and we are having a very mild winter," Ms Keightley said.

"If the grain guys can get a good season, and grain prices drop, there will be recovery in the dairy industry."

Increasing and maintaining the high milk price would flow onto growth.

"It's a very important industry we are in, and its really important Australia has its own milk and consumers can eat Australian product," she said.

"All commodities have their ups and downs; you have to ride your downs and wait for the ups.

"It's all about managing risk."