Dairy Crest has announced a 0.75p/litre milk price increase for suppliers to its Davidstow creamery, reflecting recent rises in global cheese markets.

From 1 July, the increase will take the average Dairy Crest Davidstow standard litre milk price to 25.04p/litre.

“Dairy Crest is fully committed to sharing the benefits of improved returns and joint cost savings with direct suppliers when they can be achieved,” said milk procurement director Mark Taylor.

“I am pleased that we are now in a position to increase the price we pay for milk supplied to Davidstow, reflecting the dynamics of our added value business model.”

The price rise follows a spate of increases by smaller cheese makers, sparked by a jump in mild Cheddar values from £2600/t in March to £2800/t in May – £300/t above the same time last year.

“Branded cheese markets do not respond immediately to commodity market improvements, but our experience demonstrates that the prices are somewhat protected from sudden commodity price collapses,” said Mr Taylor.

“Over the past year we have successfully delivered the price stability that our suppliers tell us is of significant value to them.

“Our discussions with our suppliers have been challenging but constructive. We will continue to work closely to deliver our shared objective of building a sustainable milk supply for a demand-led business.”

David Herdman, chairman of Dairy Crest Direct, which represents farmer suppliers, said: “We have been in continuous discussion with Dairy Crest over recent weeks and are pleased that we have been able to secure a milk price rise to reflect the improving market situation.

“Our focus is to achieve a fair milk price for DCD members and so this process, to review and monitor our markets, is very much an ongoing one.”

Industry pundits claimed the competition from improving cheese contracts should encourage liquid milk buyers to follow suite and increase their own prices to reflect, albeit belatedly, the considerably improved commodity market returns.