Dairy Crest tanker© Rex Features

Dairy Crest has dropped both its headline milk prices by 1.5p/litre for March.

Farmers on the processor’s liquid contract will be paid 23.09p/litre, while those on the Davidstow cheese deal will receive 25.09p/litre.

See also: First Milk holds March milk price

Dairy Crest suffered a financial blow in the past fortnight when it lost a third of its liquid milk business with Morrisons.

The processor’s prices are now 8-9p/litre lower than they were a year ago.

But in better news for farmers, the company also brought in a price floor until July, meaning prices will not fall further though they could improve.

“I am under no illusion that this latest cut in milk price will cause further serious damage to the sustainability of our supply chain.” David Herdham, Dairy Crest Direct

Dairy Crest dairies managing director Mike Sheldon said the floor would give “much stability and certainty” to farmers planning ahead for the spring flush.

He said he hoped dairy markets would recover by the summer and this could be reflected in the price producers are paid.

David Herdham, chairman of suppliers’ group Dairy Crest Direct, said the price floor should not delay any upward movement in price if the supply and demand situation improved.

“I am under no illusion that this latest cut in milk price will cause further serious damage to the sustainability of our supply chain,” he said.

“That said, the introduction of the price floor will at least provide farmers with some price stability throughout the spring flush, at what we trust is now the bottom of the market.”