First Milk announced that it will increase its standard litre milk price by 0.25 pence/litre (0.38 cent/litre) for those in its cheese and balancing and Highlands & Islands milk pools from next month.

It takes the revised standard litre prices to 21.65p/litre (33.15c/litre) and 22.35p/litre (34.22c/litre) respectively.

The additional price rise for producers is as a result of new commercial deals and further cost management within the company's cheese business, Chairman Bill Mustoe said.

"Despite operating in a marketplace where prices have been broadly static in 2010, we have been successful in generating additional returns internally through cost savings, improved efficiency and a better mix of products in the market," he added.

Delivering these returns has allowed First Milk to add GBP8 million (US$12 million) to its milk fund between February and April this year, according to Mustoe.

The price increase was the company's move towards market-related pricing, which delivers more transparent prices for defined milk pools based on net market returns.

"We will move the milk price up again for each of our milk pools as soon as we have further improvements in net returns," Mustoe said.