New Zealand's biggest independent dairy processor, Open Country, says the soaring price of raw milk has contributed to a financial loss for the company three times larger than the previous season.
In its annual report, the company posted a $29.5 million loss for the year to July 2011, compared to an $8m loss the previous season.
Sales rose by nearly $200m to $680m in the same period, but the cost of those sales increased by nearly 40%.
Open Country's chairman Laurie Margrain says steady global demand for dairy commodities has pushed up the price of milk, putting pressure on processing margins.
He says Open Country paid out a record $7.56c per kilogram of milk solids to its farmer suppliers last season.
Fonterra paid $7.60c per kg and a 65c a share dividend in the same period.
Mr Margrain says as an exporter of processed dairy products, the high price of raw milk and the strong kiwi dollar have taken a toll on the company's bottom line.
He says the company hopes to return to profit this season.