Farmers blamed for fall in milk prices

Muller has revealed that its milk price will fall by 1.6p per litre to 32p from June 1, following hot on the heels of another cut by Arla, which was made with only three days' notice.

The yoghurt giant has blamed the move on oversupply of milk, with production hitting record levels, while globally traded commodities such as cream and butter have seen a reduction in price. The value of cream has fallen by 16 per cent in the last year, and butter by 19 per cent.

While the latest move might have been expected to lead to a fresh round of blockades, as seen at Muller's Market Drayton creamery last year, campaign group Farmers For Action has said that the move was always likely when farmers were oversupplying the market.

Chairman David Handley said: "This is nobody's fault, in my opinion, other than the farmers.

"Dairy farmers know we have got to control supply management, we have been here before and when we have been down this road we know this is the only outcome.

"Processors jump on every opportunity to cut the price with the excuse that they have too much milk, and we said last year that while we were working hard to get prices up that it lay in farmers' own hands.

"If they went ahead and produced milk without consideration of the fact that the UK has not got the processing capacity to turn it into products and take of global markets, this is what happens."

Mr Handley added that the inability to cope with the flood of milk had come about because of a lack of investment by most companies – excluding Muller, which has spent millions on its facilities in Shropshire, and Arla.

And he warned that another price cut could lead to further action.

"If they look to cut again, as some companies are indicating, it may turn into a different ball game and we might see the FFA getting into the same position as last year," he warned.

Muller added that the long term outlook for the British dairy industry remains positive.

Martin Armstrong, head of group milk supply, said: "Whilst any correction in the farm-gate price is disappointing, the market is simply responding to higher levels of supply and a weakness in demand for dairy commodities.

"Whilst UK farmgate milk prices are not immune to volatility and will be subject to increases and decreases over time, we believe that future prospects for British dairying are strong."

Roddy Catto, chairman of the Müller Wiseman Milk Group Board which represents suppliers, said he was 'disappointed' with the cut, but that it is driven by supply and demand.