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In addition, it is seeking selling price increases from its customers wherever possible.

Today Dairy Crest has also announced that it has had no alternative but to reduce the milk price it pays to around 575 of its farmers who don’t supply either its retailer milk pools or its Davidstow contract, by 2ppl from 1 May 2012.

This reduction partially reverses the additional 3.95ppl Dairy Crest paid these farmers during

2011.

Dairy Crest has confirmed it will maintain the leading price paid to the farmers who supply its Davidstow creamery – home of the leading Cheddar brand Cathedral City.

Mike Sheldon, Group Milk Procurement Director for Dairy Crest stressed that Dairy Crest remains totally committed to its 1,300 dairy farmers. He also explained the importance of the £75 million investment programme within the Dairies business, which had facilitated the consultation on the two site closures.

“After such a strong year for milk prices in 2011, we are very disappointed to have to reduce the price we pay our farmers and we have delayed this decision for as long as we could. We know that milk production costs remain high and that this will be a blow to those of our farmers who are affected. However, the market pressures on our Dairies business mean that we have no alternative.

“We certainly haven’t taken this decision lightly and have looked at all other options. We have undertaken a thorough review of our selling prices and our customer base and we have also cut our own costs. The tough decision to consult on closing two of our dairies and reductions in depot and head office jobs demonstrate this.

“Our strategy is to add value to milk and we are extremely proud to be a British company buying

British milk from high quality, professional dairy farms. We are committed to providing our farmers with the best home for their milk and we will continue to do everything we can to support them. That’s why we are investing in our Dairies business - and we’re doing this without asking our farmers to contribute through capital deductions. 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 at this time.

“Looking ahead we are continuing to drive Dairy Crest forward. We have demonstrated our ability to develop strong businesses that pay market-leading milk prices, our Davidstow contract for example, and we are determined to do the same with our Dairies business.”