Dairy companies have announced a raft of huge liquid milk price hikes for farmers, in an effort to quell frustration about low returns in the industry. Major processors Dairy Crest and Arla Foods have broken the 25ppl barrier with the price rises unveiled for this autumn. Dairy Crest alone is raising the farmgate price by more than 25% with a 5.5ppl increase on milk for the supermarkets over September and October. Arla's 5ppl increase will come in October. "There's a very militant mood among farmers," said one industry source who didn't want to be named. "The rash of price increases seems to have had a calming effect." First Milk also raised its price by 2ppl to 20.6ppl, and a host of small and niche milk buyers made similar increases. Officially, processors put the rises down to strengthening commodity prices. "These market-leading price increases reflect the recent strength of dairy markets and will help our suppliers cover the additional costs they are facing," said Arthur Reeves, Dairy Crest's milk purchasing director. "Although cheese prices have been slower to rise, we are confident of being able to materially lift our milk-for-cheese prices further from 1 October." Dairy companies were also careful to leave the door open to further price increases later in the year. "The market will go higher, although we don't know how much higher," said a First Milk spokesman. "We will make sure what we pay is in line with the market." But despite the increases, a number of farmers are expected to pull out of contracts with the major buyers and broker milk on the spot market, where prices have topped 38ppl. Arla's biggest dairy farmer, David Barnes, quit supplying the processor last month, and 19 Wiseman suppliers in Scotland handed in their notice because the processor couldn't guarantee a milk price of 30ppl by Christmas.

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