Good news for Shropshire farmers as Muller raises milk prices by 2.5p a litre

The move, which comes on the back of a recovery in the global value of dairy produce, builds on a 2p per litre increase which takes effect tomorrow, and will take the standard price to 25.44p per litre.

That will be accompanied by a retailer supplement of 1.1p in January, taking the overall price paid to farmers on non-aligned contracts to 26.54p.

"We are delivering on our commitment to offer a competitive and stable milk price throughout the market cycle," said Lyndsay Chapman, agriculture director at Müller Milk & Ingredients.

"We know that farmers place a high value on the security of a contract with a dairy company who is investing for the long term and not so directly linked to volatile commodity returns which can change rapidly, exposing them to high levels of downside risk."

Rob Newbery, the Telford-based NFU regional director, said: "This will be very welcome news to dairy farmers in Shropshire who either supply Muller Wiseman or whose price is impacted by the Muller price.

"The damage to farmers businesses as a consequence of unsustainable milk prices has been significant. It is important that all milk buyers deliver improving returns from the market place, back to farm gate without delay."

Meanwhile, Muller has also completed a run of 16 meetings with farmers around the country, including in Shropshire, to discuss a new milk contract which will affect both its historic suppliers and those who transferred to Muller when it acquired Dairy Crest's dairies business last year.

Muller has delayed the distribution of that contract, which will affect all its 1,900 suppliers, until January while it takes stock of the discussions.

The new deal is intended to narrow the gap between farmers' forecasted milk supplies and the amount the provide, in a bid to reduce volatility in the value of dairy goods.

"It's clear that in the past few years the whole dairy sector has suffered from supply and demand imbalance," Ms Chapman said.

"Real damage has been caused to farmers and processors as a result of having to dispose of large volumes of excess milk at very low values when production surges, or conversely having to buy from third parties at high values when production falls.

"Going forward we want to keep as much value as possible within our own farmer/processor supply chain by developing a closer working relationship with farmers, and moving away from current industry thinking which tends to be short term and reactive."

She added: "At our meetings we have heard a range of strong, considered and sometimes conflicting views on our contract proposals and these have varied regionally.

"We will now take time to review this feedback and will therefore put back the introduction of our new contract offer. We expect to send our farmers the final contract documents in January, with the option to sign up from February."