Dairy Crest is to allow farmers to walk away from contracts with three months notice following a milk price reduction.
The company made the announcement ahead of its AGM on Tuesday (17 July).
It said the change in contract terms builds on other initiatives Dairy Crest has introduced to try to help farmers who are under pressure following recent price reductions.
These include giving longer notice of any price changes and jointly appointing an independent consultant to review the mechanism behind the company’s milk pricing process.
Earlier this month, Dairy Crest also introduced a price floor for its standard liquid contracts.
The company said this guaranteed that the price paid to farmers on these contracts will not reduce further this year, but that the price could still increase if market conditions improved sufficiently.
Group Milk procurement director Mike Sheldon said: “We fully understand the difficulties our farmers face and we have been working with their representatives at DCD to explore what we can do to further improve our milk contracts.
“Weak cream prices have increased this pressure, so we have stepped up our efforts to provide support, and we are pleased to be able to announce what we believe is a significant step forward at this stage.”