First Milk and Dairy Crest have announced further cuts to their farmgate milk prices.

From 1 January, First Milk will reduce the price it pays for its manufacturing pool by 1.1ppl to 22.9ppl, and for its liquid pool by 1ppl to 21.7ppl. The company previously cut its prices in July, September, October and most recently, this week, when prices were cut by 1.8ppl (manufacturing) and 1.4ppl (liquid).

“Unfortunately market indicators for core dairy products have declined further since the start of November,” said First Milk chairman Sir Jim Paice. “In order to put our milk prices in line with projected market returns, we need to reduce our milk prices further.

“We are working on a number of measures that will help us to manage future volatility and better align milk production and demand. We will make an announcement on this as soon as possible.”

From 3 January, Dairy Crest will cut its rates for farmers on Davidstow and liquid contracts by 1.25ppl, to 27.79ppl and 25.79ppl respectively. It also cut prices in September, October and November.

“I understand this will be disappointing news for our farmers who were hoping, like us, that the situation might have started to improve,” said Dairy Crest group procurement director Mike Sheldon. “I was pleased to agree the price hold for December, providing some respite for our farmers, but cannot continue to maintain the price against the backdrop of such extreme market volatility and increasing levels of milk production.”