High milk prices have forced an award-winning Hawkes Bay cheese factory to close, with the loss of nine jobs.

Owners of the Te Mata cheese factory and cafe, the Kaimai Cheese Company, which boughtit in 2009, said "dire" financial circumstances had forced the closure.

Higher milk prices and lower sales were major factors in the company's troubles, executive director Wyatt Creech said.

"Milk is a major component of the cost of specialty cheeses - a very high milk price means a very high cheese price and lower demand."

Creech said the company also struggled to pay "top up" payments to Fonterra when the milk price rose above what had been forecast at the start of the season.

"The culmination of this is that Te Mata and Kaimai found themselves committed to unprofitable retail supply contracts and has lost money on those contracts."

He said the company would now move all production to its Kaimai factory at Waharoa, near Matamata, closing the Te Mata site.

"It was decided to close the Te Mata cafe too, simply because without the factory it cannot be managed on its own from Waharoa."

There was already interest in leasing the cafe business and the site was likely to be sold.

In a letter to staff dated March 31, Creech said the company's financial health had deteriorated and was now "considered to be dire".

All possible alternatives were considered before making the decision to close Te Mata.

No new jobs were available at Waharoa, where staff were also being restructured, and laid-off Te Mata staff would not receive any redundancy pay.

It's understood nine staff and some casual workers were employed at Te Mata.

Yesterday a notice on the door said the cheese company was permanently closed, and referred queries to Kaimai.

Kaimai Cheese bought Te Mata in September 2009.

At the time the Havelock North operation produced more cheese than Kaimai.

Te Mata Cheese began producing in 2005, and sold up to 135 tonnes of white-rinded, blue and feta cheese a year.