First Milk is considering cutting its farmers’ milk price because of unsatisfactory returns from cheese.

The cut – if implemented – would be applied to First Milk farmers who supply milk into the dairy co-operative’s cheese pool, The Grocer understands.

The prospect of a price cut comes after First Milk chairman Bill Mustoe issued a statement this morning warning of a “crunch point” for the British cheese industry, and called for better prices from customers. “Over the last few months, we’ve supported members to the hilt in terms of milk price, but going forward, returns for cheese need to move substantially and quickly,” he said.

Speaking to The Grocer, First Milk confirmed a price cut was one option it was exploring in the weeks ahead. “It would be a lie to say that it isn’t on the spectrum of possibilities,” said a spokesman, but added: “In the meantime we’re continuing to have dialogue with our retailer and foodservice customers.”

The idea of a potential farmgate milk price cut has sparked concern among farmers, who claim it could have a damaging knock-on effect on the rest of the market. “It’ll be like a pack of cards,” said David Handley, chairman of farmer lobby group Farmers for Action.

Milk production in the UK is currently down year-on-year, and farmers continue to struggle with high on-farm costs.