ARE fortunes on the milk price front set to turn? They could be if Müller’s move to up its price by 0.75pence per litre from June 1 is followed by the rest of the field.

Welcoming the Müller move, NFU Scotland's milk policy manager George Jamieson said: “With the current dairy market looking very healthy, due to lower than expected production and strong demand, the AMPE, actual milk price equivalent, and MCVE, milk for cheese value equivalent, are at 28.9ppl and 31.4ppl per litre respectively, which suggests that not only should prices be higher already, but they should certainly increase in the coming months.

“From a general perspective it is, for us, unacceptable that milk prices are pegged back by the supply chain based on the fear of oversupply when the UK is far from self-sufficient and is largely producing added value product and the risk is managed by the very crude and reactive pricing which is totally in the power of the processor and end user.

“The AMPE and MCVE figures suggest that farm gate price should be at least 28p and higher given that most of our milk goes to added value products," said Mr Jamieson.

“We sincerely hope that other progressive processors and retailers look beyond the outdated, defensive and regressive noises coming from some in the processing sector in response to the highly commendable recent efforts of the Groceries Code Adjudicator and the government, who have both acknowledged that there are serious problems with the contract and negotiation powers of the processing sector.”

The increase by Müller takes their direct standard litre price to 26.75p per litre, reflecting a strengthening in returns from wholesale cream and butter markets.

Müller has also confirmed plans to recruit farmers to join its 1700 strong Müller Direct group following the significant investments made at its Telford, Severnside and Foston sites. Milk supply director Rob Hutchison said: “We are pleased to see market returns improving after a challenging period, and to be able to reflect this in a higher milk price.

“Müller’s proposition for farmers is designed to be simple and clear, and it has been the subject of considerable innovation, underpinned by a desire to build a better future in the dairy industry supply chain.

“The recently launched Müller Direct fixed price contract, futures contract option and next generation initiative for younger farmers have been well received and are now driving real change in our industry. We intend to continue breaking the mould going forward," said Mr Hutchison.

Elsewhere in the sector, the price for First Milk producers was “as you were”, with the co-op holding its liquid standard price for May at 26ppl and the manufacturing litre price at 26.88p.

Commenting on the announcement, vice-chairman Jim Baird said: “The fact that we are able to hold our price for May will be welcome news for our members following such a late spring. We will continue to drive business performance to deliver more stable and competitive returns to our members.”

Arla has also held its May price at 26.39ppl. On the downside, producers with Graham’s The Family Dairy will see a 0.5ppl cut from May 1, taking their standard litre down to 26.25p.