Robert Wiseman Dairies has revealed it is in talks with its retail customers over raising retail milk prices to recoup the higher farm-gate prices it will pay to farmers from next month. The company announced it will be paying producers 1.85ppl more from 1st October. image expired

The dairy giant made the announcement in its latest trading update issued this morning; earlier in the week, Cheshire-based processors Meadow foods announced that it too would be entering into discussions with its retailers.

Wiseman said, “Whilst we anticipate our results for the six months to 1 October will be in line with expectations, recovery of these costs is important to maintain margins in the second half of the year.”

Whilst it admitted trading had been "in line with expectations" for the half year to late September, mostly thanks to winning a record contract with the Co-Operative supermarket chain, the processor also said that, due to changes within the European cream market, the overall outlook was “uncertain.”

The processor’s financial results will benefit from a £1million reduction on its fine from the Office of Fair Trading; Wiseman was fined along with several other companies for colluding to fix prices between 2002-2003. Following its probe into the affair, the OFT fined Wiseman £3.2 million.

It has been speculated that Wiseman’s overtures may meet strong resistance form supermarkets following Tesco’s unveiling of wide-reaching price-cuts last week. Wiseman Dairies’ actions come just days after the supermarket giant announced it would be cutting prices of a range of staples in its supermarkets, including fresh produce and, worryingly for dairy farmers, Tesco’s own brand milk.

The move has sparked a rash of protest from competitors and producers who fear that Tesco’s initiative could be seen as the declaration of another price war, which would see producers squeezed ever tighter; rising input costs and stagnating farm-gate prices are already causing concern in many farming sectors.