First Milk flag © Tim Scrivener© Tim Scrivener

First Milk is cutting its members’ A milk prices by between 0.6 and 0.7p/litre for May.

This takes the farmgate price for 90% of members’ milk to between 16p and 17p/litre.

The remaining 10% is paid at a B price determined by the market and which has been confirmed at 13.1p/litre for April. 

The B price forecast for May is at the same rate.

The May price cuts were needed because of falls in the market mechanism that governs FM’s returns, said Paul Flanagan, the co-op’s external relations and membership director.

See also: First Milk claims turnaround plan is on track

While this was another price cut, it was significantly less than those imposed by some competitor processors in First Milk’s milk fields, said a spokesman.

Following implementation of a turnaround plan by the co-op’s new chief executive, Mike Gallacher, the processor was back into operating profit in the year ended 30 March and over the current financial year would reward producers with more than the market was offering, he said.

For example, if the market dropped further, First Milk would not pass on the whole of that fall to members.  

This would be achieved through improved financial performance and cost savings. An independent index was being set up so that members would be able to see the benefit First Milk was passing back to producers and how the milk price gap was closing.

This would report every quarter, with the first report expected in June/July.