Arla Foods is raising its milk price to farmers by 1.65 pence per litre from 1 July.
July also sees a new quarter’s (April to June) 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.
The net impact of the milk price increase and the currency and cash flow adjustments is a 1.44 pence per litre increase in the manufacturing standard litre, taking it to 29.17 pence.
Commenting on the decision to increase the price, 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.”
Arla decreased its June milk price by 0.4p per litre.