Australian Dairy Nutritionals Group has flagged greener pastures ahead after signing a new 12-month supply agreement with Australian Consolidated Milk.
Milk manager ACM last week announced it would be lifting its price for conventional milk solids for 2019/20 on the back of an improving dairy market and a weaker Australian dollar.
ADN - which owns the Camperdown Dairy brand - said this "material increase" for both its organic and non-organic milk would lift FY20 earnings by between $1.1 million and $1.3 million.
Read Next The company's milk supply agreement with ACM will commence on July 1 for 12 months.
ADN shares lifted by as much as 3.0 cents, or 20 per cent, to 18 cents following Tuesday afternoon's announcement, which was accompanied by news its new $5 million infant formula plant was on track to arrive in Australia next month.
In April, the group said the mixing, evaporation and drying plant - which was purchased from an unnamed overseas location - will be rebuilt at the group's Camperdown Dairy Park site and has the initial capacity to produce 400,000 to 600,000 tins of infant formula each year.
The company hopes to produce its own branded range of organic infant formula by mid-2020 as it continues its shift away from white milk.
The company entered the booming organic formula market in December by finalising its acquisition of Flahey's Nutritionals for $1.5 million.
Meanwhile ADN also revealed on Tuesday its Yaringa farm remains on track to reach full organic certification by November 20.
ADN said all excess organic milk produced by the farm is contracted to ACM and will be sold at a significant premium above conventional milk.
Camperdown Dairy is also set to launch a new brand, Echlin South targeted at national distribution in FY20.
ADN shares were 9.38 per cent higher at 17.5 cents at 1455 AEST.