Dairy giant Arla will increase its price for conventional milk by 0.90 pence per litre for March, bringing the price up to 30.94ppl.
The price for organic milk, however, will drop by 0.90ppl to 39.98ppl, the company confirmed.
Arla Foods amba board director, Arthur Fearnall, said: “Global milk production, having been stable through most of 2019, ended the year with most major exporting areas starting to show growth in production. Only in Oceania did volumes decline, due to hot and dry conditions particularly impacting New Zealand.
“Commodity markets remain strong, though the recent trend of increasing protein prices and reducing fat prices continue, particularly in Europe.”
However, while market fundamentals appear to be unchanged, fear of reduced demand in Asia due to the coronavirus outbreak has negatively impacted global powder prices.
UK agriculture director at Arla Foods, Graham Wilkinson, commented: “UK organic milk production has remained strong but demand has weakened, resulting in an imbalance in the market.
“Whilst the reduction to our Organic price is unwelcome for our Organic farmer owners, as a business it remains a strategic priority for us and is why we remain committed to continuing to fuel the growth of organic products and expanding our organic portfolio to offer consumers greater choice.”
NFU Scotland (NFUS) welcomed news of the increased March price, particularly at a time of pressures in the world markets.
Recently appointed NFUS milk chair and Arla producer Gary Mitchell said: “The current spring weather doesn’t bode well, but Arla producers can take some comfort from this increase in price”.
However, he said the announcement raises a number of issues as some Scottish milk producers are now receiving 20 per cent more for their milk than their neighbouring farm.
“In general, this calls into question the current state of the UK market as we know this price from Arla is a reflection on the pan-European markets,” he added.