A steadying in global dairy commodity markets will see Müller Milk & Ingredients increase the price it pays its farmer suppliers from 1 June.
The supplier said it would hike its farmgate price by 0.75 pence per litre to 26.75ppl, stemming a series of price cuts since the turn of the year due to global dairy market volatility.
It has also announced plans to recruit farmers to join its 1,700-strong Müller Direct producer group following investment at its Telford, Severnside and Foston factories.
The price increase comes as average year on year bulk cream and butter prices in April rose by 8% and 10% respectively [AHDB] after significant falls during the end of 2017 and early 2018.
“We are pleased to see market returns improving after a challenging period, and to be able to reflect this in a higher milk price,” said Müller milk supply director Rob Hutchison.
It follows Müller’s announcement earlier this month of a new supply deal with Lidl, which gives farmers the opportunity to fix up to 50% of their supply at a price of 28ppl for the next three years.
The new three-year partnership with the discounter, which comes into effect on 1 June, will see Müller supply 90% of Lidl’s liquid milk and butter products, with Arla losing the 30% share of the Lidl business it currently holds.
The dairy giant is also preparing to offload its loss-making food service delivery operation - acquired as part of the deal to buy Dairy Crest’s milk division - which supplies fresh milk and other products to 3,000 non-residential customers in England and Wales.
Müller said the operation lost £5m a year and has launched a 45-day review of the service.