Milk processor Dairy Crest has bucked this month’s trend by raising and holding its two main milk prices for August.
The 400 farmers on a Davidstow contract will see their price increase 0.25p/litre to 25.34p/litre.
This is to reflect the higher on-farm standards needed for the infant formula plant that is now coming on stream.
The 700 liquid producers will have their price frozen at 23.09p/litre for the sixth month running.
Earlier this week both Arla and Muller Wiseman cut their headline milk prices by a penny or more, as dairy markets showed no sign of recovery.
Dairy Crest milk procurement director Mike Sheldon said it was the right decision to keep prices stable, despite production remaining at record levels.
He said the new farm standards audit for the factory at Davidstow, Cornwall, had been gone well and farmers’ efforts could now be recognised.
“In the South West we are really proud of the quality of the milk our Davidstow farmers produce and the standards to which they farm,” Mr Sheldon said.
“Being able to demonstrate this to our customers is essential for our exciting infant formula projects.”
Dairy Crest announced last July it was investing £20m at the Cornwall site to build a facility to make galacto-oligosaccharide – an ingredient widely used in baby formula.
This was on top of spending £45m on a new demineralised whey powder plant.
Dairy Crest has partnered with New Zealand dairy giant Fonterra, who will market and sell the products abroad.
The Davidstow factory will remain the core of Dairy Crest’s business if the sale of its dairies division to Muller Wiseman is approved by competition authorities.
Last week Muller offered concessions that could avoid the deeper investigation proposed after fears the merger could raise milk prices for shoppers.
The Competition and Markets Authority, which is considering the new offer, has said there are “reasonable grounds” for thinking the £80m deal could go through by the end of 2015.
UK gets first dairy producer organisation
Dairy Crest farmers have overwhelming agreed to join the UK’s first dairy producer organisation (DPO).
More than 95% of farmers in existing suppliers’ group Dairy Crest Direct have signed up to the new body.
In May, Dairy Crest Direct launched its new structure, which uses an exemption from competition law to let representatives negotiate milk prices with the processor on the farmers’ behalf.
DCD had to secure approval from its members to form the producer organisation by 1 July.
The group’s chairman David Herdman said he was delighted farmers had endorsed the first DPO in the UK.
“The legitimacy, accountability and rigour provided within a DPO structure helps to future proof effective farmer representation in what is such a challenging and fast-evolving dairy marketplace,” he said.