Facts not fear must set milk prices, rural affairs minister Alun Michael has told the House of Commons.

Hard facts show average farmgate prices were up by more than a penny a litre on the same time last year, he said.

As a result, farmers have been receiving their highest figure for five years.

But he failed to convince MPs who warned milk producers and processors faced an ever-tightening financial squeeze.

Tory, Labour and Liberal Democrat MPs lined up with tales of dairy farmers being pushed out of business due to the low prices demanded by supermarkets.

Those fears were spelled out against the background of the OFT’s audit to check whether supermarkets were complying with the code of practice.

The minister insisted changes in farmgate prices and supermarket prices were reflected one-on-the-other. “There was thought to be dissonance between the two, but that does not appear to be the case,” he added.

But Isle of Wight Tory MP Andrew Turner complained that while shoppers paid 37p a pint, farmers received just 10p - a situation he blamed on “rip-off supermarkets”.

Labour backbencher Lindsay Hoyle said: “The supermarkets' cartel is putting on pressure, so farmers struggle to find someone to buy their milk and are then forced into selling it at a reduced price against the premium they had in the past.”

West Country LibDem MP David Heath believed the entire dairy chain was now distorted from beginning to end. He said: “Primary producers and processors are constantly squeezed to the point that there are unsustainable milk prices - which mean that many of them are going out of business.”