Arla Foods UK plc has confirmed to its dedicated milk supply group, Arla Foods Milk Partnership (AFMP), comprising 1,600 individual members, that it has increased its standard litre price by 1ppl from 1 April 2007, bringing the price for a one million-litre producer to 19.4ppl.
In a letter to all AFMP producers, Peter Walker, Arla's Director of Milk Buying, said that the increase was made possible because the company was passing back to producers all monies recovered through recent negotiations with its customers to reflect extra on farm costs.
Some increases have been achieved during March and these monies will be included as part of the forward price from 1 April 2007.
In his letter to producers, Peter Walker said: "Over the past few weeks Arla has been progressing, with all of its customers, the claim put forward by its farmers for farm cost inflation. I am pleased to report that good progress has been made with the majority of customers now having agreed to price increases to reflect these extra on farm costs.
"The Tesco announcement is further positive news. Arla is now working very closely with the Tesco team to put in place the supply chain arrangements to meet Tesco's criteria so that their designated producers are in receipt of the Tesco price of around 22ppl at the earliest practical date. Our target for completion of the project is three to four months.
"Once the Tesco initiative is successfully implemented, and because of the well established relationship with Asda, around 60 per cent of AFMP members will receive a significant premium over Arla's basic price. We will continue to look for opportunities to extend these benefits to more Partnership members as and when opportunities arise.
"We are pleased that the profile of our customer base has allowed us to report good progress in improving returns for Partnership members."