Müller is to reduce its Direct milk price by 1.25ppl from March making this the third drop in price since December blaming the drop on a "surge" of milk production on farms.

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However Muller stresses that farmers who chose to use the Muller Fixed Price Contract will continue to receive 28ppl per litre.

Milk Supply Director, Rob Hutchison, said: “Supplies of milk from farms are well ahead of forecast and this is impacting the value of this milk. At times like this in the market cycle it is important that processors retain the flexibility to be able to offer different solutions.

“The Müller Fixed Price Contract is an innovative example and farmers who use this option have significant protection from this market volatility.”