Muller has confirmed that the milk price for its 700 Muller Direct farmers will reduce by 1.5p per litre (ppl) to 26.5ppl from April. The company said the deterioration in global wholesale cream and butter values over the past six months, combined with higher levels of farm production, is continuing to put pressure on farm-gate milk values.

Last week Arla announced it was slashing its milk price for March by a whopping 2.16ppl, resulting in a liquid standard litre price of only 26.08ppl, and a manufacturing standard litre price of 27.11ppl. Meanwhile, Arla announced their financial results for 2017 last week that revealed gross profit falling 5 per cent to €2.28bn with profit before tax down 19 per cent to €321m compared to €398m in 2016.

NFU Scotland Vice President Gary Mitchell, a dairy farmer from Stranraer who currently supplies Arla said: "Arla's price cut of 2.5 euro cents per litre takes its milk price down to a very uncompetitive UK price of just over 26ppl. That is very disappointing for Arla suppliers who are also owner members of the co-op. As a company that rightly prides itself on its global exposure, added value brands and innovative initiatives, this price does not reflect the ambitions or expectations of its farmer owners, nor the wider dairy community.

"As a co-op which judges itself on its ability to generate returns to its farmers, then there must be a case for Arla elected farmer leaders to hold the management to account over this unacceptable price. Given the additional retail contracts that Arla have recently secured in the UK, members are right to question whether these deals have been won at a cost to producers."

First Milk also announced last week that from today (1 March) it was cutting the price it pays for liquid milk in its Scottish pool by 1.25ppl to 26.84ppl, while suppliers to Grahams Dairies will see their payments reduced by 1ppl from today.

NFUS Policy Manager George Jamieson said: "At the turn of the year, NFUS highlighted the ill-advised, hasty retreat on milk price by processors at the first sign of a weakening market. We had hoped that improving market signals in recent weeks would stall unreasonable price cuts.

"Some commentators have supported NFUS in challenging processors. Milk prices in 2017 did not reach the heights the market justified, which should have taken farmers close to 32ppl. Instead the average price in 2017 was 28.8p, almost 10 per cent lower than in 2013 and 2014 when commodity prices were actually lower than they were last year.

"The sad and unacceptable fact remains that milk pricing is at the discretion of the processor, who has the power to effectively set a price to manage their margins and manage their risk."