The grants are based on milk production and valued at four cents a kilogram butterfat and eight cents a kilogram protein for all milk delivered to the company this season and backpaid to last July.
ACM commercial general manager Peter Jones said the water support payment for March to June would then be paid on a monthly basis.
Mr Jones said the company would pay for support payments out of its earnings.
“Setting up for next season is crucial; that’s why ACM is taking this payment out of its balance sheet to assist farmers,” he said.
“This payment is not a loan and will not have to be paid back to ACM.
“It is something we want to give suppliers and hopefully it eases some financial pressure.”
ACM told its farmers last week it was guaranteeing a minimum farmgate milk price of $6.50 a kg of milk solids.
The floor price includes a nine month should period at $7 a kg MS and three spring months — September to November — at $5.50 a kg MS.
Mr Jones said the opening price would be announced later this season but was forecast to be $6.70 a kg MS, allowing dairy farmers to budget for the coming year.
But dairy farmers must sign on by March 31 to be guaranteed the floor price.
“We are trying to provide certainty, not forcing their hand,” Mr Jones said.
“It’s more important than ever that our suppliers have a clear line of sight when it comes to next season’s pricing.
“This has been a tough season and high water prices, fodder and grain have all put pressure on dairying businesses.”
Undera ACM supplier Gemma Monk said the would sign up before the end of February.
“The price itself is a good thing, but what I’m focusing on the most is that they are being so proactive compared to other milk processors,” Ms Monk said.
Fonterra Australia came under fire last week after secretly offering contracts to its larger northern suppliers at an average farmgate price of $6.71 a kg MS this season, backdated to last July.
That has disenfranchised smaller milk producers in northern Victoria and those from the Western District and Gippsland.
Fonterra Australia offered the contracts to shore up milk supply in response to challenges from ACM and Parmalat, which were paying higher prices to dairy farmers this season.