The NFU has denied that Arla Foods’ milk price cut has undermined its newly published vision of a bright future for British dairying.

Instead Gwyn Jones, head of the NFU dairy board, said that Arla’s 0.35p/litre cut underscored the need for urgent change and lent weight to the report.

Mr Jones said that he hoped the new report, A Vision for the Dairy Industry, which looks to co-operation, surging exports and level production, would act as a catalyst for root-and-branch change across the industry to tackle the crisis of confidence among dairy farmers.

“We [NFU] believe there is a good future ahead for the dairy industry, but we can’t afford for things to go wrong before we even get there,” he said.

It was in the interests of processors and retailers to make sure that did not happen.

Joanne Denney-Finch, chairwoman of the Food Chain Centre said shared the NFU’s upbeat view

Cost would remain the prime issue in achieving a sustainable, profitable industry, warned Tom Hind, the NFU’s chief dairy adviser and author of the report.

He urged dairy companies to accept greater transparency, taking advantage of benchmarking and appealed for legislators to strip away the red tape that prevents farmers and processors from expansion.

But he also told the dairy industry to prepare for the move to fixed price, long-term contracts. In return, farmers would have to level out milk supplies.

“The industry must discuss, debate and act on this vision, and changing the contract is a first step,” said Mr Hind. “Dairy UK is the only show in town for this, because it brings everyone together.

“We need a market based approach, because we’re not going to get the government to rig the market, nor are we going to get more regulation.”