Pembrokeshire dairy farmers have been denied an anticipated penny a litre milk price rise this autumn.

After what has been described as a challenging pricing round, the company which buys the majority of milk produced in Pembrokeshire says there will be no change to the April price.

First Milk blames a slump in demand for skimmed milk powder and butter while retailers have refused to pump extra cash into the system.

It had been widely predicted that a winter milk shortage triggered by foot and mouth disease would push up the price. Producers across the county were preparing to increase production to fill the gap but have been left bitterly disappointed at First Milks announcement. Producers are currently paid between 19.5p and 20.5p a litre. Robert Voyle, who represents dairy farmer members of the FUW, says producers were only prepared to overcome potentially serious shortages if processors agreed to increase prices.

Mansel Raymond, a First Milk director, admits the industry needs a price increase. He fears the announcement could speed up the exit of producers from the dairy sector. The majority of milk producers were hoping for another price increase, the industry still needs it, he says.

We were hoping the price could be pushed back up to a realistic level, we need more for our milk.

Although he believes there could still be a milk shortage, production over the last four months had been higher than anticipated. A dry autumn has extended the grazing season and cows are being fed good quality silage. This trend could be reversed now slaughtering under the Over Thirty Months Scheme has started in Wales. The disruption in calving patterns created by foot and mouth disease will also be a factor.

Alan Taylor, First Milks producer services director, says the company will maintain its fight to improve revenue and drive down costs to benefit members.