The main milk buyer in the north and north-east – Muller Wiseman Dairies – has announced plans to cut the price it pays farmers next month.
Muller has confirmed that its standard litre milk price will fall by 1.75 pence to 24.15p a litre from March 5.
The dairy giant had held its milk price for this month, against a backdrop of price cuts by its main competitors.
However, in a statement the dairy said it was no longer able to maintain the widening gap between it and its competitors.
Managing director Carl Ravenhall said: “We continue to take very difficult and painful decisions within our company to ensure that our costs are as low as they can be, but our business cannot compete if the cost of the milk that we buy from farmers is substantially higher than that of our competitors.
“We very much look forward to seeing an improvement in the market for farmgate milk which can then be reflected in the milk price which we can offer.”
All major milk buyers, including Muller, have been slashing milk prices in recent months as a result of a mass of milk on the market and weak global demand.
The latest milk crisis led to Glasgow-based farmers’ co-operative First Milk being forced to delay payments to farmers last month.
A Scottish Parliament inquiry has also seen supermarkets and processors give evidence to MSPs this week and last, over what steps are being taken to protect farmers from sharp price cuts.
To highlight the plight of Scottish dairy farmers, the Press and Journal launched a campaign last month to encourage more shoppers to buy Scottish dairy produce.
The campaign has been backed by local farmers including Jean McLean who milks 370 pedigree Holstein cows at Mains of Culsh Farm, near New Deer.
Mrs McLean, who supplies 1.4million litres of milk a year to Muller Wiseman, said every time the milk price is dropped by a penny, the business loses £14,000.
The news of Muller’s price cut comes as market indicators suggest a turnaround in the dairy markets.
The latest global dairy trade auction, which took place on Tuesday, saw a 9.4% uplift in values.