Arla Foods amba has announced an increase of two eurocents per kilogramme for July.
When the increase in the on-account price is applied to the UK standard manufacturing litre, the increase is 1.65ppl.
But the net impact of the milk price increase and the currency and cash flow adjustments is a 1.44ppl increase in the manufacturing standard litre, taking it to 29.17ppl.
July sees a new quarter’s average exchange rate introduced to the pricing mechanism. However this money was used to support the milk price in May and June.
In addition, the rebalancing of the UKAF cash flow will conclude this month with a further small deduction.
Arla Foods amba board director, Jonathan Ovens, said: “This will be welcome news for our owners that we are reflecting current market returns from rising fat prices in our July milk price.
“The current market situation is characterised by strong demand and low stocks of fat, which is driving up prices for butter, cheese and other products containing fat.
“The market for protein is also firming, however at a low level,” he added.
NFU dairy board chairman Michael Oakes said: “This is a positive announcement from Arla and clearly a move in the right direction. Even though some may claim that improvements have been slow in coming through, Arla do have an agreed milk pricing policy in place which they share with their supplying members.
"They also provide regular updates on company strategy and markets through briefings and meetings. Those farmers supplying Arla need to take every opportunity to get involved in these meetings and engage more with their farmer representatives.
"This is in line with our NFU Dairy strategy which calls for better, fairer supply chain relationships through:
- promoting engagement with processors, know your milk buyer, understand their business, increase your knowledge
- consider better ways of farmgate milk pricing and challenging transparency
- advocating the right to producer representation."