Farmers are urging super-markets to put up milk prices after Asda agreed to pay dairy suppliers an extra 0.5p per litre.
Alan Warrington, chairman of the NFU West Midlands dairy committee, welcomed the announcement but also expressed concern at the potential knock-on impact of Asda's decision to reduce its retail milk price.
Asda made the announcement as it launched a new dairy campaign, the Four Pint Pledge, which involves increasing farm gate prices and promoting milk to consumers by price cuts and advertising.
Mr Warrington said: "The farmgate increase is a positive move to address some of the cost increases and producers in the West Midlands will be keenly watching to see whether other supermarkets follow their lead.
"This increase amounts to an admission by Asda that there needs to be a redistribution of profits in the milk supply chain for dairy farmers to continue.
"I hope that Arla and other milk processors as well will be pressing this point with their customers, particularly Tesco.
"At the same time, though, I am concerned by moves to reduce retail milk prices as this will only serve to devalue the product and potentially create further downward price pressure in the market place."
Mr Warrington also praised the actions of NFU members and others in carrying out a public information campaign at selected Asda stores in the past couple of weeks. ..SUPL: