Arla has confirmed that strong commodity markets will enable it to deliver an increase in the farmgate price of conventionally produced milk from 1 March.
The co-operative, which has about 2,500 farmer suppliers in the UK, hinted at a briefing on its accounts last week that a small price rise was possible.
It will be the first change in the price, aside from minor tweaks caused by exchange rate adjustments, since January 2019.
The UK manufacturing price will increase by 0.9p/litre to 30.94p/litre for milk at 4.2% butterfat and 3.4% protein.
However, the on-account price of organic milk is set to drop by 0.9p/litre to 39.98p/litre.
Arthur Fearnall, Arla Foods’ amba board director and a farmer owner, said fears of reduced demand in Asia, due to the Covid19 virus, has had a negative impact on global powder prices but the market fundamentals were unchanged.
“Commodity markets remain strong, though the recent trend of increasing protein prices and reducing fat prices continue, particularly in Europe,” he said.
Graham Wilkinson, UK agriculture director at Arla Foods UK, said demand for organic milk in the UK had weakened, resulting in an imbalance in the market.
“As a business it remains a strategic priority for us and is why we remain committed to continuing to fuel the growth of organic products and expanding our organic portfolio to offer consumers greater choice,” he said.