Farm gate prices for milk have been dropping for four years in succession, according to Ministry of Agriculture figures, In the first half of this year the average price was 15.88p a litre, 35% down on the first half of 1996 and 12% down on last year. Faced with the possibility that many UK producers might be forced to quit, multiple retailers have joined the debate on what is a viable milk price. Dairy companies are being forced to reconsider their milk buying policy and are left with no illusions by farmer lobby groups that prices have to go up to keep the industry alive. Farmer groups have been demanding an uplift of at least 3p a litre but leading milk buyers have been trying to keep the increase down to 1p a litre (although others favour 2p). Some supermarket groups have taken the unusual step of announcing they are prepared to see their packaged milk prices rise by 2p a litre provided they can be certain the increase will be passed back to the farmer. If this change were adopted universally across the UK it would cover about half the national milk production which goes into the liquid milk market. The other half of national production is used to make cheese, butter, milk powders and other dairy products. With these products, the farmers point out that market prices for these dairy commodities have risen this year by at least 4p a litre in milk equivalent terms. With butter, for example, the market has moved recently to a premium of 10% over the intervention support price while skim milk powder has moved up steadily this year to a 34% premium over intervention. Given these high and, in some cases, still rising dairy product prices it now looks as if dairy farmers will get some relief from their economic plight from October 1 ­ probably to the tune of 2p a litre, bringing prices back to their level of a year ago. {{PROVISIONS }}