Muller has announced a 1p per litre milk price reduction for its farmer suppliers starting from October.
The price slash will affect Muller Direct suppliers, taking the standard litre price to 25.25p per litre.
Those on a premium contract will receive 25.75ppl. The 0.5ppl premium is paid to qualifying farmers annually in arrears effectively as a 13th payment.
Farmer suppliers on the fixed price contract will receive a price of 28ppl, which remains unchanged for October.
The milk processor said that the price reduction “reflects record levels of milk production at a time when the industry is facing marginal decline in demand for fresh milk and other dairy products”.
Rob Hutchison, milk supply director, said the dairy supply chain in the UK is experiencing an 'extremely difficult period'.
“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.”
He added: “We are confident this will place our business and supplying farmers in a strong position as the sector emerges from this period of significant and fundamental change.”
The news follows Arla confirming last week that its price for conventional milk will remain the same for September 2019 at 30.22ppl.
This means the dairy cooperative has held its milk price for eight consecutive months.