Robert Wiseman Dairies yesterday announced it will increase the farm-gate price paid to its members by 1.85 pence per litre from October. A company spokesperson said this was in response to stronger commodity markets.

The increase in price will bring the new price to 28.425ppl for all 1,022 Wiseman Milk Group producers. This latest announcement means Wiseman has now increased its milk price by more than 4ppl since May 2010. The company, which handles over 30 per cent of all fresh milk in Britain, said this was a reflection on the competition that exists in the fresh milk market, caused by high global values for butter and cheese, higher on-farm production costs and competition for milk supply.

Pete Nicholson, Wiseman's milk procurement director, said, "It is important that we act to ensure that our farm gate milk price is competitive against a backdrop of higher prices offered by cheese manufacturers."

However, NFU data from February this year reveals milk production cost an average of 29.1ppl for the period April 2010 to March 2011. Although the price increase will put Wiseman’s producers in a better position than many of its competitors’, the price paid will remain well below the cost of production.

 With raw material costs increasing, meaning farmers face increasingly squeezed margins, European proposals for more flexible contracts which aim to redistribute power along the supply chain have gained widespread support.