Dairy processors are on the verge of squeezing more money out of supermarkets and middle-ground retailers for their milk, say industry sources.

But none is set to be passed back to farmers.

The cash will be used to cover the processors’ increased energy and packaging costs, which Arla Foods says amount to 1.47p/litre.

Arla would not confirm that it would receive more cash, but it is believed to be close to striking a deal with its biggest customer, Asda. Robert Wiseman Dairies said it was in the middle of discussions and it was too early to comment.

Any gains could take away some of the downward pressure on February milk prices.

“It would be very good news,” said NFU dairy board chairman Gwyn Jones.

But, so far, only Dairy Crest has committed to maintaining its price until March and Farmers for Action leader David Handley said it was widely expected that Wiseman and Arla would still try to cut payments.

Any cuts would be met with direct action, he added.