Bumper global dairy prices have come too late for thousands of British dairy farmers, expected to leave the business this year, unable to make ends meet on the slim margin earned from a pint of fresh milk.

Too late for British farmers but too much, too soon for an army of food processors that are now threatening consumers with a swingeing round of price rises in products from butter to chocolate. The global gyrations in dairy prices, buffeted by Australian drought and surging Chinese demand, have not yet affected the price of liquid milk on your doorstep.

The home-delivered pint is almost unchanged at 48p per litre, according to the Milk Development Council. Gwyn Jones, head of the National Farmers’ Union’s dairy board, reckons that doorstep milk could eventually rise by a penny but the main impact will be on processed foods and cheese. Within the past year, the supermarket price of a pint of double cream has risen from 91p to £1.12, a increase of almost a quarter.

Mr Jones, who has a 750-strong dairy herd in Sussex, reckons more dairy products will feel the squeeze. “As we go into the summer it will feed through into supermarket shelves. Cheese prices will have to go up,” he said.

Britain’s liquid milk market is cut off from world dairy markets, explained Carmen Suarez, chief economist at the NFU. The product has a short shelf life and little impact on the global supply of milk powder, so most UK farmers are not yet seeing the price benefits of the global supply shortage.

However, the raw material price surge is squeezing the margins of food manufacturers, including Nestlé, Hershey and Danone, which makes Petit-Beurre biscuits. The French firm recently said that it was absorbing the impact of a 40 per cent rise in the cost of butter but expected a price rise by the end of the year.

Hershey, the American chocolate maker, gave warning in May that the high cost of milk powder was crimping its profits and warned investors to expect lower earnings growth.

Meanwhile, Nestlé said that it was monitoring the impact of commodity prices daily and that it would look at all the options, including product price increases.

Domino’s Pizza has warned investors of a 30 per cent rise in the cost of its products, due to cheese price increases.

Anxiety is mounting at the UN’s Food and Agricultural Organisation over dwindling stocks of milk powder. “Programmes to feed the poor will face difficulties,” the organisation said.

Some 2,500 UK farmers are expected to quit dairy production over the next two years, driven out by the slim 18p-per-litre margin they typically earn from fresh milk. Meanwhile, the cost of cattle feed, such as corn and soya, is being driven up by demand for biofuels, putting further pressure on cattle farmers.

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