First Milk, which is 100% owned by British farmers, has pledged to introduce a 2p/litre business performance supplement for producers now that it is back trading profitably.
The Glasgow-based company’s turnaround in fortunes follows cost cutting and operational improvements.
Operating profits of around £5million were delivered for the 2016 financial year, an improvement of £25million on the previous year. Debt has also reduced and at the end of March 2016 was £33million, compared to £84million in September 2014.
First Milk chief executive, Mike Gallacher, said the business improvement supplement would be awarded to members in stages.
“While the majority of our commercial returns are linked directly to market prices and therefore not within our control, our relative performance versus others in the UK market is within our control,” he said.
“We have therefore committed to members that we will deliver a 2p/litre improvement in milk prices over and above any market-related movement in returns. We do not intend to save up money, but will instead pass cash through to members as soon as it becomes available.”
Mr Gallacher said the first part of this money would come in June with a 0.25p/litre supplement.
Reduced market returns mean First Milk’s A price would have reduced from June 1 by 0.59p/litre for the Scottish mainland pool. However that price will instead reduce by 0.34ppl as a result of the business performance supplement.
