Dairy farmers are being urged to renegotiate milk contracts with retailers.

The NFU believes farmers should take the opportunity this year to readdress the balance of power by renegotiating milk contracts to include a provision for price determination.

Buyers should be offering long-term guarantees for a return on capital, with NFU milk committee chairman Gwyn Jones warning that milk supplies will continue to fall if they don't.

There are already reports that farmers are responding to higher milk production costs by cutting cow numbers and milk volumes

However, moves to renegotiate contracts could be resisted by the processors and Dairy UK. "The issue is a test of whether Dairy UK can break out of being a body that is good at what it does with government into one that can show some commercial leadership," said Jones. "The problem it has is that its biggest members are not farmers but major dairy companies who do not want Dairy UK getting involved in their commercial activity."