First Milk producers on cheese contracts will get a 1.1p/litre price increase in two stages across July and August.

This will bring the manufacturing pool standard litre price up to 30p/litre, with an initial increase of 0.6p/litre implemented on 1 July and a further 0.5p/litre implemented on 1 August.

In April, the farmer-owned co-operative warned it could be forced to cut the price on these contracts unless retailers paid more for cheese; at the time industry insiders said it could be by as much as 2p/litre.

However, at the end of April the company called off the price cut and held the price at 28.9p/litre. It also announced a 1p/litre increase to 30.65p/ltire for liquid milk producers with a 0.5p/litre rise on 1 July and a further 0.5p/litre rise on 1 August.

First Milk has approximately 1,800 farmer members with around 35-40% of the 1.45bn litres of milk procured a year processed into cheese.

Commenting on the cheese price increase, chairman Bill Mustoe said the co-op recognised its members’ expectations regarding milk price and the continued pressure on farm costs due to the poor weather.

“Our objective as always is to move the returns that we pass back to members as far and as fast as we can. With this in mind, discussions are continuing with all our customers,” he said.

“The strategy for the business remains squarely on investing in added value. Whether that be through acquisitions and joint ventures, investing in our processing assets to allow us to respond to consumer demand and produce a broader range of products, or investing behind strong brands like Lake District Dairy Co, as we have done recently with the launch of our Quark range.”

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