Farmers have received a fresh hammer blow after one of the country’s leading dairy firms cut its milk price for April.

The Arla cut, it is feared, may start a trend which other milk buyers could follow and, if that is the case, industry chiefs say it could be the final straw for a number of dairy farmers who haven’t recovered from the last slump in prices.

Arla’s decision to reduce milk prices by 0.42p/litre from tomorrow has been criticised as too much too soon by union chiefs.

The National Farmers Union said it was concerned and disappointed at the move, which cuts the manufacturing standard litre price to 28.13p/litre, for those supplying at least one million litres on every other day collection and in the top quality band.

The liquid standard litre price will drop by the same amount, to 27.03p/litre, based on 4 per cent fat and 3.3 per cent protein.

The actual reduction applied to the producer price is much larger at one eurocent/litre or 0.79p/litre. This is partly counteracted by the mechanism which the co-op uses to account for currency changes, which adds back 0.37p/litre to the price from April 1.

Arla Foods amba board director Johnnie Russell said: “We are extremely disappointed to be in a position of having to reduce our milk price to our owners, after seven consecutive increases."

Arla He added: “During that period, we have delivered an additional £76 million in milk price increases to our owners since September 2016. The reduction in our April price is unwelcome news.

“Over recent weeks, the reduction in commodity prices has impacted yellow cheese, protein and spot market prices and this is putting pressure on the European market in particular.”

NFU dairy board chairman Michael Oakes said the price reduction was extremely disappointing for UK members and for the whole of the dairy sector.

“This is the first milk price drop in 2017 by a major UK milk buyer. With daily milk deliveries starting to recover before the annual Spring flush, this clearly shows that the market is still in an extremely fragile state.”

The NFU is organising an NFU Dairy Risk Management conference on Thursday, bringing together the whole dairy supply chain to consider new ways of managing price risk.

“Paramount in managing milk price risk is better management of supply and demand both at farm and processor level. This includes more accurate forecasting of supply and demand and sharing of future growth strategies forecasts,” said Mr Oakes.

NFU chief dairy adviser Sian Davies said the mitigation merely masked the significant scale of the price cut.

“We want to clarify that this is a significant cut to milk prices,” Ms Davies said.

“It is extremely disappointing and comes as farmers are still recovering from the low prices seen in the past two years.”

She added that Arla had acted too quickly to market changes.

“We know processors are watching the wholesale market which has come back slightly and that they are concerned about the spring flush in production,” she said.

“But this cut has been made too quickly and goes against all the work the industry has been doing to reduce risk and volatility in the market.”

“We need to keep pushing for mechanisms that will help us all reduce risks to benefit everyone in the chain. That is why Arla’s decision is such a disappointing move.”

Steve Dunning Shap dairy producer Steve Dunning predicted if the industry saw any drops it would be the end for some people. “Everyone is hoping prices will hold, we cannot afford for them to plummet again.”

Ainstable dairy producer Robert Craig said: “We are not going to see big peaks in prices, but hopefully we will not see big dips like we’ve seen in previous years.”

Arla will hold the district meeting at the Tufton Arms, Appleby-in-Westmorland, on Thursday at 7.30pm.

Mr Oakes urged all members to make an effort to attend.