FARMER-OWNED dairy co-operative First Milk has thrown its producers an apparent lifeline, announcing that its standard litre milk price will increase from April 1, 2019.

The price hike will see the current value go up by 0.25ppl to 27.75ppl for the liquid standard litre or 28.68ppl for the manufacturing standard litre.

First Milk say this increase reflects what they describe as their commitment to pay a new, previously announced, member premium of 0.25ppl from April 1 to the majority of members who have reached their capital target.

The premium payment will be calculated and accrued monthly and paid as a lump sum in April 2020, and for future years will be decided annually by the board. FM also announced that the premium will be adjusted based on each member’s achievement of their capital target.

Vice chairman and farmer director of First Milk, Jim Baird, said: “The markets remain uncertain but, despite this, we have been able to deliver these additional returns by delivering on our growth strategy. This additional member premium payment rewards our members for their loyalty, and we remain focused on continuing to develop our business to deliver long term prosperity for our members.”

NFU Scotland milk committee chairman and First Milk member John Smith, who farms near Campbeltown in Kintyre, said: "First and foremost, First Milk producers will welcome that the April milk price has stabilised at a time of rising costs and uncertainty and that the company has committed to paying a bonus payment on capital invested by producer members, accrued over the coming year, and payable in April 2020.

"Members were called on to prop up First Milk financially only a few years ago but this announcement suggests that the company is now on a better track and has a more positive outlook going forward.

"A number of First Milk members meetings are set to be taking place shortly and I would encourage First Milk suppliers to attend them so they can hear first hand from the company about its plans for the future."

This apparently positive announcement came, however, in the same week that First Milk's share prices took a dip that renders them much less valuable than they once were.

This week's second asset match monthly sale of First Milk C preference shares closed with only 186,000 shares changing hands at 11p per share, down almost 40% on last month's sale average, which saw 152,000 shares trade for 18p out of a total issue of 68.5 million shares.

Dairy sector analyst Ian Potter said: "This would appear to be bad news for former First Milk suppliers who may be seeking to cash in their previous investments."