GRAHAM’S dairies have given their producers a welcome boost by rescinding the 0.5p per litre reduction that was set to kick-in from May 1, keeping the company's standard litre price at 26.75p.

In a letter to producers, Graham’s said it had made the move because its 'agile' business was able to respond to markets that have strengthened.

Managing director Robert Graham said: “As a family business we pride ourselves on our agility and one that recognises the importance of our farmer suppliers. We hope that this action continues to reinforce this.”

While other buyers have retained May price cuts, Graham’s appear to have done the right thing by their farmers, according to industry analyst Ian Potter, who suggested that those other buyers should take note.

Graham’s also pointed out that actual deliveries of milk were running 3% below their farmers’ forecast and the company had now asked its producers to bring supply more in line with those forecasts.

According to Mr Potter, the big question was whether rescinding price cuts in this way would be permitted under the government’s proposed new compulsory milk contracts, which would remove milk buyers' 'discretion and agility'.

An idea of these compulsory contracts' details is anticipated soon.