Retailer Co-op has announced it will move to the Muller direct price next month, which will mean a milk price increase of 1.3p per litre for farmers.
Co-op Dairy Group (CDG) confirmed the milk price for dairy producers from 1 April would rise from 40.95ppl to 42.25ppl in April.
It said it had recognised the "pressure and recent challenges" between its basket price, in operation for nearly a decade, and that of Muller's direct price, which is currently 42.25ppl.
The retailer added that it needed to evolve its pricing model to demonstrate its "continued commitment to farmers".
Matt Hood, Co-op food managing director said: "Co-op is a long-term supporter of British farming, and I am clear that farmers are the backbone of the UK’s food supply.
"Supporting UK agriculture is more important than ever, and whilst our milk pricing model has worked well over the past decade, we recognise the need for its evolvement.
"We understand the industry is facing many challenges, and whilst I know this won’t be a salve to all of those, we hope this increase in milk pricing goes someway to helping our farmers”.
Tom Bramall, chair of Co-op’s Dairy Group, said he valued the relationship the retailer had with farmers, and added the price movement was a positive step forward.
"The committee and I welcome the opportunity to have open discussion on how the pricing model can be improved to ensure the continued success of the CDG," he said.
"It is also welcomed news that a long-term contract with Muller has been agreed which includes a stronger role for the CDG in decision making.
"We have achieved so much since the inception of the group and I know with continued co-operation, the group has a strong future."
