Dairy Farmers of Britain is holding its milk price until the end of March but other buyers look likely to follow Arla Foods’ price cut that was announced last week.
Matt Sheehan, director of membership at DFB, said: “Trading conditions, particularly in the liquid market, remain tough, with continuing energy and cost pressures.
We have, however, been successful in counteracting some pressures through price increases to customers and other cost savings.”
A spokesman said he couldn’t say what would happen to prices after March, but added: “We have been working hard to stand still but hopefully we will start sprinting soon.”
Richard Weaver, chairman of supply group Dairy Crest Direct, which supplies about 75% of Dairy Crest’s milk and has already agreed a price with the processor until 31 March, said Arla’s 0.9p/litre price cut for February and March would make negotiating April milk prices much more difficult.
“Prices were going to be under pressure anyway, but we did have some stability in the market.
Arla’s back-dated cut effectively destroys the whole process.”
Robert Wiseman Dairies has held its price until the end of February but is widely expected to reduce payments in March.
“We cannot continue to maintain a milk price that is so out of step with the rest of the market indefinitely,” said a spokesman.
First Milk, which buys 2.2bn litres of milk annually, said it had no plans to cut prices, but as the Scots-based milk co-op provides 42% of Wiseman’s milk any reduction by the processor would likely have a knock-on effect.