First Milk, the dairy co-operative that is 100% owned by 1200 British farmers and languishing at the bottom of the milk price table, has announced that from 1 July, all milk pools will see their standard litre price for "A" volumes reduced by 1p per litre (ppl).

The only exception is the Midlands Balancing Pool which will see a 0.7ppl reduction.

After capital contributions, the price cut will leave the 350 or so Scottish dairy farmers who supply the co-op receiving between 14 and 16.5ppl for their milk, in some cases about half the cost of production.

First Milk has also announced that Sir Jim Paice will step down as its chairman after just 22 months in office. Sir Jim commented: "In my letter last week I said that I believe the Board needs more people with real commercial and business skills. That means I think there has to be significant change in the constitution of the Board, and that includes the chairman role."

"Signalling my intention to stand down allows the Board to immediately start work on scoping out the personal and professional qualities that they require in a new chairman, and initiating a recruitment process. In order to ensure an appropriate transition, I will stay in role until a smooth handover to a new chairman is achieved."

Speaking after the announcements, NFU Scotland President Allan Bowie said: "First Milk's previous business model has failed the company and its members.

"The turnaround plan put in place by new CEO [Mike] Gallacher recognises the urgent need for changes. The savings generated by the turnaround plan and this latest price cut, while they may help secure the financial viability of the company, will put those supplying it with milk in a perilous place. It is imperative that the plan delivers quickly an uplift in milk price.

"It is tragic that these further savage price cuts to First Milk members will see another tranche of family farms with a long history in dairying forced to review their future in milking cows. Some may hold on until cattle are housed but for others, this latest cut of a penny a litre will leave many needing to take decisions now."

Market round-up

Messrs Craig Wilson Ltd sold 904 prime lambs in Newton Stewart yesterday to a top of £90 per head and 191p per kg to average 156p (-26.8p on the week).

A small show of 111 cast sheep saw ewes sell to £90 for Suffolks and £64 for Blackfaces, while hoggs peaked at £60 for Texel crosses.