Arla Foods UK is to pay an additional 1p a litre for milk from its supply group, Arla Foods Milk Partnership (AFMP).

The Scandinavian dairy giant will now pay the AFMP 27p per litre with effect from 13 October.

"Following positive discussions with our key customers we have informed members that we will be increasing our price by one penny per litre to 27ppl, with effect from 13 October 2008," said Hanne Søndergaard, deputy chief executive of Arla Foods UK. "This one penny is in addition to the increase to the volume bonus that we introduced from the beginning of this month.

"We recognise that there is volatility in the marketplace and will continue to monitor developments, and on-farm costs, to ensure that our milk price reflects market conditions," she added.

Commenting on the milk price increase, AFMP chairman Jonathan Ovens, added: "This increase of one penny offers an important boost to members as they move towards the winter facing further on-farm cost rises."

Arla's standard litre is based on supplying one million litres at 4% butterfat, 3.25% protein and top bands of hygiene.