First Milk has caved in to farmers’ demands and ditched the planned 1.7p per litre cut in the price it pays for milk, as Dairy Crest announced a two-month delay to its own price cut.

The processor said it had “decided to immediately withdraw the planned August price cuts that were put in place as a result of moves by our liquid customers”.

“While we have still to complete discussions with our liquid processor customers, we have a responsibility to our farmers to show leadership in this situation and remove any uncertainty,” said First Milk chief executive Kate Allum.

“Dairy farmers have spoken with one voice over the last few weeks, and they’ve made it clear that they reject the existing model where they are price takers and favour working together to gain an equal seat at the negotiating table.

“It is critical that the whole dairy supply chain looks to develop better structures and relationships for the short, medium and long term.”

Dairy Crest, meanwhile, said there would be a two-month delay to its own 1.65ppl price cut, which would have taken effect on 1 August.

“Our bold move to set aside this cut for two months will allow us to continue to work with our farmers to find long-term solutions,” said milk procurement director Mike Sheldon.

“We remain committed to paying fair milk prices – a commitment fully demonstrated by today’s decision.”

Dairy Crest said two of its customers had already agreed to pay a supplement to support farmers – a reference to announcements in recent days by Morrisons and Lidl – but it was not enough to completely reverse the 1.65ppl cut announced by Dairy Crest earlier this month.

Dairy Crest said it would make up the shortfall itself whilst it discussed the situation with other customers.