Farmers' milk prices rose in October for the first time in nearly four years, according to the latest Ministry of Agriculture survey. The average increase of 0.7p per litre followed the intervention of major supermarket groups ­ most prominently Asda ­ who agreed in October to pay more for their milk supplies, provided that the extra money was passed back to farmers. A rise of 2p per litre was the stated target but this has yet to be achieved. Despite the higher farm gate price, milk production has so far failed to respond. Milk deliveries to dairies were 1.7% lower in December than a year ago and provisional figures for the first week of January show the shortfall widening to 4%. For the first time in the past decade, UK milk output in the year to March is going to be seriously below the quota level set by the EU. This reflects the claim by most dairy farmers that, even with higher milk prices, they are still producing at a loss. A few of them will be getting a further small price increase this month. However the majority will have to wait until April to see whether dairy companies and retailers are willing or able to bring prices more into line with costs. {{PROVISIONS }}