FIRST Milk, the troubled dairy co-operative, has announced 70 job losses and major changes to its milk pricing strategy.

From June 1st the prices paid to members will differ according to their geographic location and their milk's end use.

There will be four manufacturing sites with farms located around its Arran, Campbeltown, Lake District and Haverfordwest creameries making up its manufacturing pools.

Farms within Northern England, the Midlands, East Wales and the Scottish mainland will make up its three balancing milk pools.

The First Milk Board has agreed a £3.3m reduction in member payments which has been built into its milk prices, equating to an average price reduction of 0.33ppl.

The NFU said First Milk members supplying the Haverford West Creamery in Pembrokeshire would be the only ones to see an increase of 0.3ppl – all others would see a price decrease from June.

The hardest hit would be the liquid milk or balancing suppliers who will see a 1.2ppl decrease taking their June A volume milk price to 19.3ppl.

First Milk confirmed the B price range for June will be 14 –17ppl.

Mike Gallacher, chief executive, said: "None of the decisions announced today have been taken lightly, but they are necessary steps in the process of rebuilding a secure and stable future for First Milk, its members and its employees. As a team, our aim will be to provide every support for those impacted in the coming months.

"First Milk plays an important role in many rural communities across the UK and continues to value the support it has received from all our stakeholders. Our strategy is aimed at continuing to restore the health of First Milk so that we can support those communities through delivering better prices for their milk."

Rob Harrison, NFU dairy board chairman, said he understood drastic and decisive action had to be taken to secure the longer term sustainability of the business.

But he said: "This news on milk prices brings little or no comfort to some members across England and Wales who have supported them over the years.

"The headline price of 19.3ppl for the balancing supply doesn’t take into account the 2ppl capital investment requirement that came into force in January nor the fact that this is only paid for 80 per cent of the milk supplied.

"The actual milk price received by these farmers will be far worse and I would implore First Milk to do all they can to increase both the A and B price for these farmers."

Sir Jim Paice, chairman of First Milk, has announced an independent review into the business's recent disappointing performance. Modelled on the recent Myners review of the Coop, it will identify recommendations which will be shared with members by the summer.

Mr Harrison said: "We look forward to this painting a full and clear picture of what has happened in recent times and help explain the rationale for the turnaround strategy."

First Milk is holding members meetings about the changes including one in Cumbria on Monday (11).