The fact that the UK wholesale price for bulk cream decreased between December 2011 and January 2012 by approximately £220/tonne is not wholly unexpected, but will be unwelcome news for UK dairy processors.

The well-rehearsed line many dairy farmers will have heard is that when commodity values are high, their exposure to the less volatile UK retail marketplace, while offering shelter, can disappoint in market peaks.

With commodities potentially cooling, the test of farmers’ relationships with retail will be whether the supply chain can be true to its commitment to stable milk pricing - a test the industry cannot afford to fail.

Rob Newbery, NFU chief dairy adviser