Dairy Crest puts off milk price cut

Milk supplier Dairy Crest has bowed to pressure and agreed to put its planned milk price cut on hold after protests from farmers.

The group is postponing the 1.65p a litre reduction due from August 1 for two months to hold talks with farmers over the way forward. It follows a week of blockades by farmers, who are calling for all price cuts to be reversed amid warnings the plans will force many out of business.

Dairy Crest is the first milk producer to withdraw its price cut and all eyes will now be on other dairy processors to see if they follow suit.

Farmers For Action (FFA) called off its Dairy Crest protests as a result of the announcement, including a 24-hour blockade of the firm's processing facility at Foston, Derbyshire. It said in a statement on its website: "All energy will now be concentrated on the other companies and these protests continue."

Producers have repeatedly slashed the price they pay farmers for milk this year after seeing the value of cream plummet.

Dairy Crest, which supplies around 15% of British milk production, already reduced its milk price by 2p a litre in May. Further cuts would see farmers paid just under 25p a litre for milk - less than the 30p a litre it costs to produce milk, according to the National Farmers Union (NFU).

Dairy Crest said it hopes the two-month delay will allow it to "find a long term solution for the dairy sector".

Morrisons and Lidl - two of Dairy Crest's major retail customers - have agreed to pay more per litre to support farmers but Dairy Crest said the additional revenue from this would not be enough to completely reverse the planned cut.

It also supplies the so-called middle-ground market, such as small retailers, which is already struggling under intense competition and would be more difficult to secure price hikes with.

"In the short term, while discussions with other customers are ongoing, Dairy Crest will make up any shortfall itself," it added.