Average yearly prices from export-based processors Warrnambool Cheese and Butter and Murray Goulburn were at 28 cents a litre and 26-27c/L respectively before incentives are added - down about 25 per cent on 2008 prices.

Both companies, however, will announce step-ups during the year.

It is understood domestic-based processor National Foods has offered some suppliers an average base price of about 31c/L for the year, plus quality and volume payments, with a possible price review in January.

Last year, National Foods' opening price for July was about 47c/L.

Excess milk volumes and volume incentives from National Foods have also had cuts, making it difficult for many dairyfarmers to produce more milk to cover the lower prices.

Last year, if a supplier produced more than 5 million litres, he or she was paid an extra 3.25c/L on top of the base price.

This year, it is understood that if a National Foods supplier produces more than 9mL, the extra payment is only 2.75c/L.

National Foods general manager Geoff Lynch would not comment on the pricing schedule of the farmer contracts as "milk prices are a matter between us and our farmers - we don't discuss them publicly".

"But we are very competitive with our pricing," he said.

"We are a follower of prices, tied to those of the big buyers like Murray Goulburn and Fonterra, and we pay a premium on that to stay competitive."

South Australian Dairyfarmers' Association president David Basham said National Foods contracts were disappointing because there was no reason for the domestic market processor to drop its prices.

"National Foods is not dictated by export price, they are dictated by the domestic price, which hasn't moved," he said.

"Prices in the supermarket haven't changed but the suppliers are now receiving even less for their milk."