The board at Arla Foods has agreed to increase its price for conventional milk for October 2018.

This, coupled with a 0.19p quarterly adjustment in the currency smoothing mechanism Arla’s manufacturing pric, will increase the price paid to suppliers by 1.09p to 32.47p/L, from October 1.

Arla Foods amba board director, Johnnie Russell, commented on the decision to increase the price.

“While Arla’s performance has strengthened enabling this welcomed increase, the recent recovery in commodity prices has slowed, especially in the last week or so.

"However, the full impact of the drought is as yet unknown.”

Arla's set manufacturing price is based on every other day collection, at 4.2% butterfat and 3.4% protein.

Arla farmers are paid on constituents via a manufacturing schedule. For ease of comparison, the liquid price is 31.21p/L, based on 4% fat and 3.3% protein.

The Arla on-account prices for organic milk will increase by 3c/kg in Sweden, 2c/kg in Denmark and will remain unchanged in UK and Central Europe.

However, in the UK the Arla on-account price for organic milk will increase by 0.19p/L from October 1 due to the effects of the quarterly currency smoothing mechanism.

The newly-introduced adjustment for organic farmers who have decided to use EU granted exceptions to use non-organic forage will remain as a deduction of 3c/kg.