Global milk production is expected to increase by 2.7 per cent to 750 million tonnes in 2012.

Earlier this week, global dairy trade auction results showed declines in nearly every product category, except for Cheddar cheese and lactose.

The European Milk Board has said that the milk sector is experiencing difficulties similar to the milk crisis in 2009, except this time, rising input costs are causing problems to escalate.

Italian producers have faced reductions of around 15 per cent per litre of milk. In the Netherlands, spot-market prices for milk have fallen, meaning they are 10-12 Euro cents less than co-operative payments.

In the UK, Wiseman, DairyCrest and Arla have all recently announced farmgate price cuts.

There are reports in Germany that Aldi has cut the retail price of some dairy products by up to 10 per cent. Farmgate prices are still relatively high compared to other EU countries.

Average basic farm-gate prices for milk in France for instance dropped from 31-32 Euro cents in March to 28 Euro cents in April; in Belgium, from 28-29 Euro cents in March and to 25 Euro cents in April.