Fonterra says it will cut its base milk price paid to Australian farmers by 32 per cent between February and June.
Fonterra's managing director in Australia, Bruce Donnison, said the move represented a 9 per cent reduction across the full season from the opening price, the ABC reported.
"Unfortunately, we see no immediate respite from the difficult trading conditions, which are dominated by a global credit contraction, major economies in recession and collapsing prices for a range of commodities," Mr Donnison said in a letter to farmers.
Fonterra Australia's 2000 suppliers were sent reeling late last month after the dairy co-operative withdrew its November step-up payment of A7c/kg butterfat and A17c/kg protein and warned of more severe cuts to come.
The latest move also comes in the wake of a decision by rival dairy company Murray Goulburn last month to slash the base price of milk supplied from February by an average 26 per cent.
United Dairyfarmers of Victoria president Doug Chant said confidence in the dairy industry had built-up during the past three to four years but the price cuts were a huge knock to farmers and those hoping to invest.
