Dairy Crest has announced a 2p per litre cut to the price paid to farmers on its standard contract, as it continues to try to shore up its struggling liquid milk business.

The move affects 575 farmers, who will receive 26.61ppl for their milk from 1 May. Farmers who supply retailer milk pools through Dairy Crest or are on the company’s Davidstow creamery contract will not be affected by the cut.

Dairy Crest said it had “no alternative” but to slash its milk price as it tried to secure the future of its dairies business in a challenging market.

“On top of downward pressure on its selling prices in a tough consumer environment and an extremely competitive middle ground, the whole dairy sector is suffering from steeply falling commodity markets,” the company said in a statement.

Because of these difficulties, Dairy Crest has already launched a consultation on the possible closure of two of its dairies, in Aintree and Fenstanton. It was also seeking price increases from its customers “wherever possible”, the company added.

Group milk procurement director Mike Sheldon said Dairy Crest remained “totally committed” to its 1,300 dairy farmers and was “very disappointed” to have been forced to cut its milk price to farmers.

“We know that milk production costs remain high and that this will be a blow to those farmers who are affected,” he added.

“No-one wants to cut milk prices at a time when we want farmers to invest. However, the current climate has meant we have no alternative this time.”

NFU dairy board chairmen Mansel Raymond said it was clear Dairy Crest’s dairies business found itself in a “precarious situation” but added this was “no excuse” to pay farmers below the cost of production.

Dairy Crest farmers would now be forced to accept the lower milk price for the full notice period on their contracts, he added. “This is the clearest sign yet that dairy contracts need to change,” Raymond said.