The fear that the recent price cut announced by Arla could undermine the work to achieve a more sustainable milk price for farmers was fuelled on Wednesday June 28 when Robert Wiseman Dairies also announced a cut.

The Company has stated that, from 1 July, the price paid to its farmer suppliers will be cut by 0.25 pence per litre. NFUS has expressed huge disappointment at the announcement, but little surprise.

NFUS, together with other farmer groups, has spearheaded a cost recovery initiative since the turn of the year to ensure farmgate milk prices reflect recent rises in the costs of production.

With all the major market factors in farmers' favour - supply is at its the lowest for ten years, commodity prices are strong and retailers have increased the price of cheese and liquid milk - NFUS is completely disillusioned with recent attempts to undermine the justified increase in producer prices.

Speaking after Wednesday's NFUS Milk Committee meeting, its Chairman Willie Lamont, a dairy producer from Dalry, Ayrshire, said:

“Dairy farmers have been told endlessly that if they manage production, the market will deliver its rewards. Well, we have just had the lowest May production figures in the UK for a decade, commodity prices are strong and there is little use of intervention. Yet, the farmgate price not only fails to reflect these positive factors, but cuts are actually announced.

“Arla's cut not only affects their own suppliers, but undermines the efforts of those few retailers and processors out there who appear genuinely committed to a sustainable milk price. Wiseman has now said it is forced into a cut simply to stay competitive with those who cannot see past their own immediate financial returns and who fail to recognise that driving prices below the cost of production jeopardises their own supply.

“Whilst Arla might be taking a significant amount of flak at the moment, those supermarkets who bought into the cost recovery initiative must recognise their own responsibility to ensure their suppliers deliver fair prices at farm level. All the credible evidence points to increased supermarket margins coinciding with reduced farmgate milk prices.

“There is plenty in the margin on milk to ensure supermarkets can continue to make billions in profits and dairy farmers can receive a fair price. Until supermarkets recognise that and, together with processors, they start reflecting market realities, this tit-for-tat price battle to secure market share will go on, dairy farmers will continue to suffer the consequences and the future of Scotland's dairy industry will remain uncertain.”

· The Milk Development Council has reported that when the same price cuts began 12 months ago, the period of lowered prices cost UK dairy farmers £9.5 million.