Further cuts cannot be ruled out after Dairy Crest slashed 2p per litre off the farmgate milk price, the NFU has warned.

“We can’t rule it out but I would like to think we won’t,” said NFU chief dairy adviser Rob Newbery.

“The fact is there is competition for the supply of milk at the farm gate between dairy companies and we would like to think other dairy companies will show strength.”

Milk producers were given just four days notice of the 2p drop by Dairy Crest – despite expectations that farmers should be given a month’s notice of price cuts.

Effective from 1 May, the cut takes the standard litre price for 575 non-aligned Dairy Crest producers to 26.61p/litre.

Mr Newbery said the NFU had written to farm minister Jim Paice saying the issue of milk contracts needed to be sorted out urgently.

Legislation would be necessary if voluntary agreements between farmers were not going to give farmers the certainty they needed, Mr Newbery suggested.

DEFRA has also criticised the price cut.

“This is very disappointing news and proves why there needs to be real change within the British dairy industry so it can get back on its feet and thrive again,” said a DEFRA spokesman.

“Farmers need better bargaining power to generate a bigger share of revenue, which is why we’re fully behind the industry’s work to produce a voluntary code of practice on contracts that will even out the balance of power.

“We’re also encouraging business to look beyond the traditional liquid market and supply the £1bn of cheese, yoghurts and other products we’re currently having to import to the UK.”

Dairy Crest said price paid cut was vital to secure the future of its dairies business.

Group milk procurement director Mike Sheldon insisted that Dairy Crest remained “totally committed” to its 1300 dairy farmers.

The decision to cut farmgate prices had been delayed as long as possible.

“We know that milk production costs remain high and that this will be a blow to those of our farmers who are affected.

“However, the market pressures on our dairies business mean that we have no alternative.”

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