A GROUP of Murray Goulburn dairy farmer suppliers claim they will be paid up to 6-cents-a-litre less for their milk than other suppliers.

Under Murray Goulburn's new payment system, the co-op has agreed to pay farmers a price premium to deliver a flat supply of milk across the year, rather than the traditional seasonal milk supply spike.

Earlier this month, a group of 15 South Gippsland dairy farmers condemned the payment system, saying it would take at least three years to move from seasonal to flat production.

But since then the group has grown and The Weekly Times understands another 25 suppliers have left MG since the start of last month.

One supplier said it was "a sad day for the Victorian dairy industry when management of a major cooperative has to resort to ... underpaying 70 per cent of its suppliers by 1-1.5c/litre, just so they can award 30 per cent of suppliers 2-3c/litre more".

Cash-flow estimates generated by the co-operative seen by The Weekly Times showed a 200-cow farm calving from July 1 on the traditional system would receive 36.4c/litre with four step-ups.

In contrast, a 300-cow farm under the domestic payment system calving from February 1 with four step-ups would receive 45.5c/litre, a difference of 9.1c/litre. Suppliers said the difference between these two farms under the old payment system was only 3c/litre.

The Gippsland farmers said they would stick with MG but called on management to "make change or be changed."

MG field services general manager Ross Greenaway questioned the price comparisons.

"They have achieved that difference by significantly shifting their calving pattern from a normal seasonal pattern to a pattern with more than 60 per cent in the (domestic incentive) months. We have no farm anywhere near this 60 per cent," Mr Greenaway said.

Gippsland-based dairy consultant John Mulvany said he would usually see a price variation across Victoria of 20-30c/kg of milk solids, but since the MG price change had observed a differential of 50-60c/kg/MS without farmers changing anything other than their pricing system.