Milk prices should rise now if farmers are to retain any faith in the market and invest in the future, says the NFU’s Gwyn Jones.

Mr Jones, the union’s dairy board chief, said:

“There is clear evidence from independent sources that commodity prices have gone up.

I would appeal to processors to show us that the market works.

“It is becoming ever more clear that the drop in production is not just down to people leaving the industry, but because those who have the means to expand do not have the confidence to do so,” Mr Jones added.

The Milk Development Council’s Actual Milk Price Equivalent value, which measures market prices for butter and skimmed milk powder, rose by 0.7p/litre to 17.8p/litre between July and August.

Its Milk for Cheese Value Equivalent, which tracks mild Cheddar and whey powder, has also risen by almost 0.6p/litre to just over 19p/litre over the past two months.

Ken Boyns, the MDC’s chief economist, admitted it was difficult to say for how long this upward trend would continue.

But even if values rose for just two months those making dairy products would be benefiting from higher prices, he said.

“If the market works in any way that is fair, justifiable and transparent, then prices should rise immediately,” said Mr Jones.

“Unless the market decides this money is rightfully owed to farmers the NFU will have to do something about it for them.

We could ask all our members to invoice their milk buyer for the money owed.”

Jonathan Ovens, chairman of the Arla Foods Milk Partnership, which supplies most of processor Arla Foods’ milk, said that he agreed with Mr Jones and was not ruling out a price increase when prices were reviewed next.

“We are committed to market-related pricing, if markets have moved, then prices should reflect that.

We can’t go changing prices every month, but we’ve already said we will hold prices until the end of September, when we will look at them again.”

Mr Ovens’ main concern was that sterling was strengthening against the euro.

This reduced the returns from the 80m litres of bulk cream exported by Arla each year, he said.

andrew.shirley@rbi.co.uk