It has also announced it will hold the price from July to September
Dairy Crest has announced a 1ppl milk price cut from June 1 to 29, followed by a further 1ppl cut from July 1.
This means the Davidstow manufacturing standard litre milk price will be 29ppl in June and 28ppl in July.
But the price will then be held until September at 28ppl.
Chris Thomson, group procurement director at Dairy Crest, said: “To remain competitive a price reduction has regrettably become necessary.
“We know that our farmers need stability and certainty for the future. That is why we have spread the reduction over two months and agreed the price level for the next four months,” he said.
“This latest announcement builds on our actions at the end of last year when we responded quickly to the changing market environment through a series of significant price increases, followed by a hold for the last three months.”
DCD Chairman Steve Bone said it had been difficult to agree a milk price reduction.
“Whilst negotiating we believed that it was very important to put in place a period of stability which protects us as producers through a period where milk volumes are increasing, which is having an impact on dairy markets.”
Barber’s has announced it will hold its milk price for June. The Barber’s Assured contract price will remain at 29.05ppl, with the former Barber’s contract at 27.55ppl.
It said it was ‘encouraging’ UK and EU dairy markets in April had proved ‘more resilient’ than some commentators predicted.
Cream and butter prices have continued to improve, cheese markets ‘more stable’ with skim milk powder under pressure.
Principal consultant at the Dairy Group, Nick Holt-Martyn, said he was not surprised to see recent milk price drops, as globally, there was ‘no market’ for milk proteins.
He said: “Skim milk powder is at intervention level. The butter market is virtually double that, but you cannot produce one without the other.
“Dairy Crest has now satisfied its core demand and has critical volume coming in.”
He said he would be watching to see liquid processors’ decisions on milk prices, as liquid markets had been supported by cream incomes.
He said: “Liquid milk tends to follow the market, so it will probably have a knock-on effect on liquid people. It will be interesting to see if they follow suit.”
He said the announcement was further forward than it needed to be, which had given producers a ‘reasonable idea’ of what income would be over summer.
He added the mood had changed from last autumn when the industry was discussing how far the price could rise.
He said: “Now, we are in the position of hoping prices do not fall any further.”