The September amba on-account price will increase by 1ppl
Arla Foods has announced the UK standard litre for conventional milk will increase by 1ppl to 20.05ppl from September 1st.
Arla Foods amba board director, Jonathan Ovens, said: "This is welcome news for our farmer owners who continue to face challenging times on farm.
"Our increase will hopefully reaffirm their confidence in the dairy industry, after 18 months of falling prices.
"Commodity markets have continued to strengthen, as indicated by the increase in the latest GDT auction.
"This follows a significant downturn in milk production and increases in yellow cheese prices across Europe, while prices across European retail markets are also firming."
NFU dairy board chairman, Michael Oakes, said the news was ’more than welcome’.
"Hopefully it is the first of some real positive movements," he said.
"We have all been surprised by how long it has taken for the major buyers to move."
However, he emphasised many dairy farmers were still in a ‘very difficult place’.
"It is desperately needed.
"Cream has moved, commodities have moved. The spot price is up but the vast majority of farmers have not seen the benefit.
"Hopefully it will signal month by month it can improve and get back on track to becoming more sustainable."
He also warned processors current pricing may make the impending EU intervention fund tempting for farmers.
“If price does not move more will start to take advantage of it. A lot will look at it if they are better off getting paid to do less.”
NFU Scotland Milk Policy Manager, George Jamieson welcomed the news but questioned Arla’s efforts to raise prices further.
“The Arla price rise is welcome, if disappointing in scale. That said, as their objective pricing structure is agreed by members it has to be accepted that it reflects Arla’s markets which are global.
“However, the challenge for Arla and all other processors is what efforts are they making to persuade the retailer and end user to lift prices?
"We know dairy products have been sold forward cheaply, but producers cannot continue to produce at prices that are still way below the cost of production.
“NFUS remains convinced that unless the current dairy supply chain collaborates and values the needs of all – producers, processors, retailers and consumers - then the future is very uncertain.”