Northern, which buys pounds 500m worth of raw milk each year, said it hoped to recruit 5,500 dairy farmers to its scheme, the Northern Milk Partnership. It pledged to pay a higher price than the pool price paid by Milk Marque.
The MMB, a statutory monopoly owned by farmers, is to be dismantled next year and replaced by a voluntary co-operative, Milk Marque. For the first time in 60 years raw milk buyers will have a choice of suppliers.
Chris Haskins, chairman of Northern, said: 'We have had good service from the MMB over the years but now that it is to go we want to ensure security, quality and efficiency in our milk supply by dealing direct with our producers.'
He said if Northern could shave 1/2 p off the price it paid for each litre of milk, that would save it pounds 10m a year. 'We'd be disappointed if we couldn't get the costs down in something like that area.'
NMP, a non-profit-making company, will be 50 per cent owned by Northern and 50 per cent by farmers. It is to be chaired by Richard Smith, a Yorkshire farmer, a former special member of the MMB and a fierce opponent of its dismantling.
NMP will negotiate the terms of the milk contracts but farmers will sign these directly with Northern.
Northern is one of the biggest users of raw milk, supplying drinking milk to the large supermarket chains and to millions of doorsteps. It also makes Ski yoghurt, Eden Vale cheese and other dairy products.
Andrew Dare, the MMB's chief executive, said the proposals offered no advantage over Milk Marque, which would be wholly owned by farmers: 'There will be no confusion of interest . . . and it will offer greater security since it won't be linked to the fortunes of any one company.'