Dairy Crest tanker© Geoffrey Robinson/Rex Shutterstock

Dairy Crest has dropped its liquid milk price 1.4p/litre, taking returns below 22p/litre from September.

The firm has held the rate for six months but worsening dairy markets mean suppliers will be paid just 21.69p/litre.

Farmers on the Davidstow contract have had their milk price held at 25.34p/litre.

See also: Dairy Crest raises milk price to reflect higher on-farm standards

Dairy Crest gave farmers milk price floor until the end of June, giving stability over the spring flush, while Davidstow suppliers also received a small increase in May.

But trade has continued to weaken over the summer, with UK wholesale prices slumping further and global markets taking another knock.

David Herdman, chairman of producer organisation Dairy Crest Direct, said he was acutely aware of the financial impact for farmers.

“Unfortunately it has proved impossible to mitigate the relentless downward market pressures further into September for standard liquid contracts,” Mr Herdman said.

“Against a different set of market conditions, we were pleased to conclude a further price hold at Davidstow.

“That said, we acknowledge the mounting competitive and market pressures that are also building within the cheese sector.”

Dairy Crest is selling its dairies division – which includes the 700 farmers on the liquid contract – to rival Muller Wiseman.

The Competition and Markets Authority is investigating a proposal from Muller that would ease concerns the £80m deal could raise retail prices.

An update is expected in August.

Dairy Crest milk procurement director Mike Sheldon said dairy markets were still falling while milk supply remained ahead of forecasts.

“This meant we have had to process a significant volume of milk into commodities such as skimmed milk powder and cream,” he said.

“Therefore we are now in the position that we have to reflect these adverse market circumstances within our liquid milk price.”