FIRST Milk has announced largest monthly increase for milk prices since 2007 with more to come.

The 2ppl milk price increase for October will apply to all membership pools.

The increase consists of a market movement increase of 1ppl for all non-aligned pools and an additional Business Performance Supplement of 1ppl.

The business, which has a creamery at Haverfordwest, is forecasting that its milk prices will continue to rise in the coming months.

In a letter to members, Chairman Clive Sharpe said: “For the fourth month running we are increasing our milk price to members. The increase reflects both the improved market returns and the accelerating improvements in our own business.

"Due to the changes made over the last 18 months we are now able to pass market moves directly onto members and this has resulted in a 1ppl increase for October. In addition our improved internal business efficiency has allowed us to deliver a further 1ppl of the Business Performance Supplement that we committed to pay earlier this year."

He added: “Our view of the market outlook is positive as we see prices moving towards 25ppl in coming months. First Milk is well positioned to deliver these improvements directly to our members who can now plan their businesses accordingly.”

Chief executive Mike Gallacher added: “This increase reflects both the strengthening market and the positive impact of huge changes made at First Milk over the last 18 months.

"We promised members that we would deliver an initial 2ppl improvement in addition to any market moves and I am delighted that this is now coming through ahead of our internal plan. In total over the last four months our members have seen prices increase by between 4ppl to 5ppl.

“Our aim is to get further increases to our members as quickly as possible. Meanwhile our forecasts are pointing to market prices of mid-20s and beyond."

He said member meetings were planned around the country in October and members would be informed of meetings in their areas over the coming days.