Dairy Crest has followed Arla Foods’ lead by slashing the price it pays for milk.

The milk processor’s July price for suppliers on liquid milk contracts will by fall by 0.75p/litre.

This means its base price is now only 16.216p/litre. The firm, however, said this would be held until January 2007.

In a letter to farmers sent on 22 June, milk purchasing director Arthur Reeves blamed a number of factors for the cut.

  • Weakening commodity markets with a further subsidy cut in July 2006 resulting from the mid-term review of CAP
  • Continued fierce competition in the liquid market, especially the middle-ground sector.
  • Aggressive competitor activity

Mr Reeves said: “I fully recognise that the scale of this price change will create difficulties for suppliers .

“However, I think by being open and realistic about the downward pressure affecting or business, and by providing stability until the New Year, we are working in a responsible way with our suppliers.”

Although the price cut was widely expected following competitor Arla Foods’ downward move at the beginning of June, it will still cause huge amounts of anger.

One Dairy Crest supplier who contacted Farmer Weekly said he was so upset and disappointed that he was planning to switch to another milk buyer.

For more industry reaction see the next issue of Farmers Weekly on 30 June.

Are you a dairy farmer angry about the price cuts? Then contact andrew.shirley@rbi.co.uk in confidence or phone 020 8652 4920.