Dairy processor Muller has confirmed a milk price cut of 1.5p/litre to its 700 Muller Direct farmers from January 2018.
The 5% cut means these producers will receive 29p/litre for the milk they supply in the new year.
A Muller spokesman blamed the cut on a 25% drop in the UK values of commodity bulk cream and butter since September 2017.
Rob Hutchison, Muller agriculture director said: “Substantial movement in butter and cream values is now a familiar characteristic of global dairy commodity markets.
“While we are disappointed to see this sharp decline, the extensive portfolio of added value dairy products we make in the UK will shield farmers from the full volatility of global dairy commodity markets.”
Bigger than expected
But NFU dairy board chairman Michael Oakes said the milk price cut was frustrating and was bigger and earlier than expected.
“While fat prices have eased they remain high compared with 18 months ago.
“It wasn’t long ago that processors were making substantial income from cream,” Mr Oakes said.
“Our frustration is that prices always appear to come down quickly but take longer to improve when markets move upwards.”
He added there were no grounds to continue making cuts based on production estimates for the coming season.
“There is no need for a price crash like we saw two years ago. Back then demand was hit by the Russia ban and supply was up under ideal grass-growing conditions.
“We are nowhere near that scenario because poor second and third-cut silages throughout Europe will hold back milk production,” Mr Oakes said.