First Milk has announced a price increase of 1.2 pence per litre from July 1 on a liquid standard litre basis (4 per cent butterfat, 3.3 per cent protein).

The move follows its announcement of a major £6.5million investment for its creamery at Haverfordwest.

New silos, buildings, pasteurisers and milk separators will be created together with a new heat recovery unit.

There will be further investment in updating cheese-making equipment and whey handling facilities to increase production.

Chief executive Shelagh Hancock said: “This exciting development demonstrates our commitment to our Welsh milk processing. Over the last year we have been focused on increasing capacity at our processing sites at Haverfordwest and Lake District Creamery through improved productivity and efficiency to ensure that we can effectively balance seasonal fluctuations in our own milk pool and also meet growing customer demand.

“This investment project builds on that success to further enhance the capability of our Haverfordwest site.”

Commenting on the price announcement, Jim Baird, vice-chairman and farmer director, said:

“We have strived to deliver as much stability as we can to our members during the most recent period of volatility. It is encouraging to see that commodity dairy markets have been improving in recent weeks, and our price increase for July is a result of better returns coming through from the market, as well as improved business performance.

"As always, we are focused on maximising member milk price, and will continue to pass on any further increases as soon as we can.

“We are focused on developing customer relationships and growing First Milk. To meet growing demand and further improve our operational performance, we have recently started a £6.5m investment project at our creamery at Haverfordwest that will expand capacity by 20 per cent.

"As such, we are well placed to utilise additional milk from our farmers, who are able to grow their businesses without restriction, encouraged by our production bonus and with the security of an evergreen contract. In addition, we have been proactively taking on new members and suppliers across the country, with additional milk volume coming through in the year.”