The UK's largest dairy processor has said it is cutting prices paid to its milk suppliers.

Arla Milk Link formed when the Scandinavian dairy giant took over Milk Link as part of a number of mergers across the EU in September 2012, to form the largest processor in the UK.

Arla said that it would be cutting price paid to its farmer suppliers by 0.23 pence per litre from January, due to fluctuations in currency exchange affecting the milk pricing model. Farmers were informed of the cut on 4th January, receiving just four days' notice.

The reduction is set to last until the next quarterly review in April and sees Arla Milk link's standard price fall to 28.6ppl.

Farmers in the UK claim they cannot afford to suffer fresh attacks on their returns, following their hard-won reprieve from excessive price cuts in summer 2012 and in light of rising input costs. However, producers in Scandinavia and Germany face larger reductions.

Last month, a wave of fresh protests broke out across the Midlands, during which processors' plants were blockaded as farmers accused milk buyers of reneging on the terms of the voluntary code of practice agreed upon after a series of demonstrations in July.

News of the price cut comes as UN Food and Agriculture Organisation figures show dairy prices contracted by almost 15 percent over 2012.