Dairy manufacturer Dairy Crest's sales rose 2 per cent in the first three quarters of 2011, in spite of the "challenging business environment" which has impacted on rivals. However, the company, which owns Cathederal City Cheeses, Clover, Utterly Butterly and Vitalite, amongst other brands, acknowledged that higher milk costs are impacting on its business.

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Dairy Crest, which is trying to cut costs by £20 million a year, said cream values also fell by 15.2 per cent last month to £1,230 a tonne.

There have been forecasts that profitability will drop off in the dairy industry this year, which has led to fears that processors may attempt to cut farm gate prices for farmers supplying milk, who are only just beginning to receive the benefits of the latest profitable period in the sector.

Dairy Giant Muller, which is refurbishing its Shropshire plant and has just bought out Robert Wiseman Dairies, has cut prices for its suppliers citing the “business environment”; the blow comes at a time of record input costs, which are also affecting farmers’ margins.  

Dairy Crest has denied it is planning to cut the price it pays for milk, stating that its food division is carrying the weight in this challenging period. Its cheeses and butters have also remained profitable; sales of Country Life butter, advertised by former-Sex Pistol John Lydon, rose 8 per cent on last year.

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