First Milk hikes prices 2p/litre, pays bonus early

First Milk has lifted its milk price 2p/litre for October – the co-op’s biggest monthly increase for nine years.

Farmers in all four non-aligned pools will receive rises, increasing their “A” milk prices to 19.19-21.98p/litre.

The hike includes 1p/litre based on better market returns, with the rest coming from the balance of the so-called performance supplement, which was intended to add 2p/litre over 12 months to reflect First Milk’s improved business efficiency. The first 1p/litre was paid over the summer.

See also: Strong dairy market prices failing to reach farmgate

In a letter to members after a board meeting on Friday (23 September), First Milk chairman Clive Sharpe said the bonus had been paid out well ahead of the commitment.

He said First Milk expected prices to move towards 25p/litre in the months ahead – which suggests increases should follow.

Chief executive Mike Gallacher added that his aim was to make sure those rises were passed on as quickly as possible. The co-op is also working on projects to build on the performance supplement, he said.  

“Our members can be confident that in the new First Milk, as the market rises, so will our milk price,” Mr Gallacher wrote.

First Milk has not raised its October “B” price, paid on any milk over 80% to 90% of the previous year’s production for a given month.  

This value, which is intended to reflect shorter-term market movements, remains at 20p/litre for October – behind three of the four “A” prices.  

Milk price rises are starting to arrive as a flurry, with Arla and Dairy Crest among the leading processors announcing changes this week.

NFU dairy board chairman Michael Oakes said the improvements were a move in the right direction, but nowhere near sustainable.

“We’re hearing that certain milk buyers are accusing others for the lack of movement in their own milk price and this blame-game needs to stop,” Mr Oakes said.

“Dairy market signals are pointing skywards and we now need to see all milk buyers starting [to pay] fair, sustainable milk prices to their suppliers – prices that truly reflect the situation in the market.”