Two large-scale milk processors confirmed this week they were to cut their farm-gate milk price.
Robert Wiseman Dairies issued a statement announcing its first farm-gate milk price reduction for more than three years while Arla confirmed it will cut its standard litre price by two pence.
Robert Wiseman said that the move “reflects the continuing and sustained impact of a challenging market environment”.
In particular, there has been a collapse in the value of bulk cream.
“Higher returns from cream prior to the turn of the year partially compensated for other pressures facing the business, but the collapse in bulk cream value since the beginning of 2012 has resulted in an untenable position,” it said.
Wiseman is reducing its milk price by 2ppl to 26.42p for a standard litre from June 1.
Pete Nicholson, Wiseman milk procurement director, said: “After a three-year period which has seen our farm-gate price increase five times by a cumulative 4.55 ppl, we must now reflect the competitive environment we are operating in and substantially lower returns from the bulk cream market. The slide in the value of cream has accelerated since the turn of the year and the lack of relief from other market related pressures mean that we can no longer sustain the Wiseman milk price at the level it was at.
“It is essential that we continue to strike a balance between paying a competitive milk price to farmers who are not aligned with major retailers, and the ability to compete within our sector of the dairy industry.”
Arla had been expected to issue a smaller cut but blamed “tough market conditions” throughout the business.
It follows the move last week from Dairy Crest to reduce its prices.
The Farmers Union for Wales issued a statement in response to the cuts in which it said: “Urgent Government action is required to eliminate unreasonable contractual practices and create fairer and more balanced terms for farmers.”