Dairy farmers supplying Muller who meet the conditions for the Muller Direct Premium 2019, will see their milk price drop to 25.75p/L from October 1, 2019, a reduction of 1p/L.

However, farmers who opted to sign up to one of the fixed-price contract options launched by Muller more than a year ago, will see their returns maintained at 28p/L.

The firm explained the reduction in the market value of farm gate milk reflects record levels of milk production by farms at a time when the industry is facing a marginal decline in demand for fresh milk and other dairy products.

The misalignment has seen the value of commodity cream plummet by 37% in a year, with butter values also badly affected.

Milk supply director Rob Hutchison said: “This is an extremely difficult period for the whole dairy supply chain in the UK and whilst this supply and demand imbalance persists, it appears likely that market values will remain depressed.

Muller Direct dairy farmers who chose to hedge against volatile market conditions by using our Fixed Price Option will be cushioned to a certain extent, but for the whole industry to move forward, it must work more coherently and effectively together to align with the needs of customers and consumers.

“Muller is playing its part by ensuring that it has the dairy network capabilities, the fully recyclable and light-weighted packaging proposition and the herd health standards which consumers demand.

“We are confident that this will place our business and supplying farmers in a strong position as the sector emerges from this period of significant and fundamental change.”