Supermarket price cap risks putting dairy farmers out of business

Farmers’ profit margins have been particularly hard hit by the war in Iran, which has driven up red diesel prices and the cost of fertiliser by as much as 40pc.

Mr Craig said: “We’ve got 1,600 cows and I’m £1.4m short of revenue this year compared to last year. We could not survive at this milk price long term.”

Arla, the dairy multinational, is paying farmers almost 36p per litre and Müller is paying 34.5p.

Mr Craig added: “Caps would make [British dairy farmers] less competitive and make imports look more attractive.”

Victoria Atkins, the shadow environment secretary, said: “Rising food prices have been created, in large part, by anti-business policies of this Labour government. Rocketing energy prices, business rates, and costly red tape, have all contributed to this food and farming emergency.

“The Chancellor is desperately looking for a way out. The problem is, her Soviet-style solution is only going to make food prices rise even further.”

Ian Harvey, of the National Farmers’ Union, said the suggested price caps were “badly timed and I would argue ill-informed”.

Mr Harvey, who is a dairy farmer in Cornwall, added that older farmers can remember price caps during the 1970s, a decade marred by economic turmoil.

He said: “People much older than myself, who’ve seen this many, many years ago, said if anything it increased the inflation rather than than decreasing it.”

Jamie Blackett, a dairy farmer in Dumfries and Galloway, said price caps could ultimately lead to cows being slaughtered.

He said: “Price caps have never worked. In the dairy industry, if there was a price cap, to the point where we weren’t making any money, we’d have to cull cows and the national herd would shrink.”

Mr Blackett said that dairy farmers sending their cattle to abattoirs to keep cash flowing would drive down supply and ultimately lead to milk prices rising.

William Taylor, of Farmers for Action, which coordinated the tractor protests in Westminster this year, has called a meeting with the farming minister, Dame Angela Eagle, to discuss issues including price caps.

Farmers for Action said: “In the last 30 years almost 50,000 farmers have gone out of business across the UK. The rate of closure is increasing to approximately 5,000 per year, which is 2.5pc per annum.”

In the UK there are 7,010 active dairy farmers. The number is declining year on year.

Mr Taylor said: “We’ve lost a pile of dairy farmers.”

Food inflation stood at 3.6pc for the 12 months leading up to the war in Iran, according to the Office for National Statistics. However, it is estimated that by the end of the year it could head towards double digits.

Defra was contacted for comment.