Müller-Wiseman Dairies has announced that it will be cutting the price of milk for its farmer suppliers from June.

Non-aligned farmers supplying Müller-Wiseman will see a price cut of 1.6 pence per litre, bringing the farm-gate price to 32ppl from 1st June.

Müller said the cut is the result of record milk production and the weakening performance of dairy on global commodities markets. However, the processor said prospects for British dairy farmers remain good and announced that it had raised prices by 36 percent since august 2012, when protests swept the country and concerned dairy farmers blockaded processing plants and supermarket distribution centres (though the dairy giant gave the current price of 33.60ppl in its figures, which will be subject to a reduction in 30 days' time).

Martin Armstrong, head of the company's Milk Supply group for UK and Ireland, said on Wednesday, "Across Europe, farm-gate milk prices are reducing to reflect market changes. Whilst any correction in the farm-gate price is disappointing, the market is simply responding to higher levels of supply and a weakness in demand for dairy commodities. Whilst UK farmgate milk prices are not immune to volatility and will be subject to increases and decreases over time, we believe that future prospects for British dairying are strong."

The price cut by Müller follows similar moves by Arla, which announced a 1.27ppl reduction last week. Arla gave its suppliers just three days' notice of the cut, which will bring prices down to 33.74ppl. This led Müller to suggest in its own announcement that the Voluntary Code of Practice is being inconsistently implemented across the industry. The code was drawn up as a result of 2012's milk price protests, with the intention of giving farmers greater security in their dealings with milk buyers.

As a farmer-owned co-operative, Arla is exempt from the requirement to notify suppliers 30 days ahead of any proposed price cut.

Müller also appeared to suggest that Arla's stated farmgate price could be subject to deductions for tax and haulage, whist stating that its own price is 'clean' and accurately reflects the amount suppliers will receive. 

Reacting to Arla's announcement on Friday, Dairy Crest CEO Mark Allen said, "This latest price reduction shows the Voluntary Code of Practice is not working fairly for the British dairy sector – for farmers or processors. I find it unacceptable that… a major milk purchaser has provided just 3 days' notice of a significant milk price reduction to their supplying farmers. Those farmers are now contractually tied in for 12 months." 

In April 2012, Dairy Crest came under fire from the NFU when the processor cut prices paid to almost 600 of its suppliers and alerted them just four days before the cuts came into effect.

"This is especially concerning following a period of aggressive recruitment," Allen continued.  "Farmers have been put under significant pressure to move just before the price reduction was announced. This is yet another example of the current Voluntary Code not providing a level playing field. It is essential that the Voluntary Code Review addresses this disparity and prevents a repeat of this situation happening in the future."