THE outlook for dairy farmers continues to sour, with three major processors and manufacturers to slash their base price from next week.

Warrnambool Cheese and Butter suppliers will receive a cut of 30-32 per cent for milk supplied from February 1.

In a letter to suppliers, company managing director Neil Kearney told farmers their price will be reduced by $1.30/kg for butterfat and $3.25/kg for protein.

This represents a seasonal cut of 12 per cent on last year's opening price.

Monthly prices for Victorian suppliers range from $6.15/kg for protein and $2.46 for butterfat in February, to $3.16/kg butterfat and $7.90/kg protein from March to May.

Mr Kearney said the industry situation was different when companies announced their opening price last year. "Whilst prices on a historical basis are still pretty good, having to change mid-season was an incredible shock," he said.

"I don't think any processing company is happy this occurred."

Tatura Milk Industries followed suit. Chairman Barry Irvin told suppliers the price for the next five months will drop by an average 34 per cent.

Representing a 12 per cent drop in prices across the entire season, the latest reductions mean the base price of milk supplied from next month will be $1.28/kg lower for butterfat and $3.20/kg less for protein.

United Dairy Power also announced last week it would cut prices, from the beginning of next month, by 10-20 per cent. However, suppliers in the Corryong area could go as low as 28c/litre.

"Unfortunately they have taken a larger hit with the added 7c/litre collection (charge)," managing director Tony Esposito said.

He anticipated the UDP average milk price from next week would be down to 40c a litre from 50c a litre, averaging about 45c a litre across the season.

UDP suppliers, Charles and Carolyn Smith, Anders, Kyabram, estimated their milk price will be lower than 40 cents a litre.

Mr Smith said he understood UDP had been caught out by the milk price drop but the cut came too soon to allow him to budget.

Mr Esposito said the decision to change payments was due to the financial crisis. Raising cash was harder and costly, and he did not want associated costs passed onto farmers.

Meanwhile, Mr Esposito denied rumours that UDP was closing.