First Milk has announced that it will increase its September milk prices by up to 1.25ppl, though executives acknowledge that suppliers are still not receiving sustainable prices for their produce.

The promised rise is made up of a 1ppl market related milk price increase for September and an additional 0.25ppl Business Supplement Payment for all members due to stronger than budgeted business performance.

In a letter to members sent out on Friday, chair Clive Sharpe said, "I am pleased to report that for the third month running we will be increasing our milk price. With the market recovering and having exited our loss making activities, returns are flowing directly through to our milk price. At the same time we are bringing forward the delivery of the business performance supplement, which comes from continuing improvements in our own efficiency.”

The First Milk chair continued, ”Last month we forecast a 0.5ppl increase for our manufacturing pools from 1st September, however with further advances in the market we will actually deliver a 1ppl increase. As well as increased cheese returns, we are now starting to see price movement from some of the major liquid processors, which directly benefit our balancing pools.”

Even with the increase, many suppliers to the cooperative will still be receiving 20ppl or less for their milk.

Commenting on the situation in the dairy sector, First MIlk’s Chief executive Mike Gallacher said, "While it has been pleasing to announce these milk price increases over the last few months, we recognise that they do not yet return members to sustainable prices. However, with future market prices for commodities forecast to be around the mid-20s, members can be confident that as the market continues to rise in line with this forecast; so will our milk price. In addition, we will continue to deliver on our Business Performance Supplement commitment.

"As First Milk's performance gets back on track after a number of difficult years, we need now to give members a clearer vision for the long term future of our co-op. We now have a very different and much better business and our new vision for the future will be explained at a series of member meetings planned for late September/early October. These sessions will be hugely important as we set the course for the long term.”

First milk said suppliers can expect a further price rise in October, but that the details of this will be confirmed in September.