MILK prices have been falling across the board, plunging the barely recovered Scottish dairy sector into fresh gloom.

As from this week, March 1, First Milk producers will suffer a 1.25p per litre cut, taking the co-op’s liquid Scottish price down to 26.84p; Graham’s Dairies brings in a 1ppl drop, to 28.25ppl; while Arla’s whopping 2.5 euro-cents drop converts to an eye watering 2.16ppl retreat, taking its standard litre down to 26.08p, and manufacturing down to 27.11ppl.

As as The Scottish Farmer went to press on Wednesday, Muller announced that from April 1, it will impose a 1.5ppl cut on its 700 direct farmers, taking their standard litre down to 26.5ppl.

Newly appointed NFUS milk chairman John Smith declared: "This is another example of processors playing tit-for-tat."

“This price news is disappointing. I am in regular dialogue with First Milk and am meeting with Arla in Lockerbie within the next week or so – these price falls must not spark a repetition of previous downward spirals where producers are left to carry all the burden.

“We need contractual arrangements that promise fairness across the whole dairy supply chain and protect it from bully boy tactics," said Mr Smith. "We will be meeting with the major banks in the coming weeks in order to discuss the financial position of dairy farmers. If the price cutting continues and producers financial position moves from fragile to very fragile, we will be going to Fergus Ewing in order to ensure that the Scottish Government doesn't sit on its tail on the milk price issue like it did in 2015."

However dairy industry analyst Ian Potter was cautiously optimistic, although he conceded that Arla’s member price has gone from being one of the best in the UK – liquid 31.05ppl, manufacturing 32.3ppl – to the worst.

Said Mr Potter: “Let’s not forget Arla’s milk price is a European price and is impacted by several different dynamics to the UK price. This means others do not have to follow Arla’s move just because they can in a downward spiral race to the bottom.

“If Arla’s latest drop to 26p for liquid is a low point and prices recover post the spring flush then I would call this a result. It could be a case of one deep cut, and if they are unlucky a little bit more still to come, but for sure a 25ppl or less milk price looks less likely now than it did.

“European production and Mother Nature will have a part to play, but I believe the likely Arla milk price low point will be between 25p and the current 26,” he predicted.