The ongoing problems of achieving a fair and realistic milk price for dairy producers continues to throw up truisms.

DairyCo, the levy-funded organisation, has produced its Milkbench 2012 Report, which states as a major conclusion that: "The key determinant of profit is total cost of production, not milk price."

Well, of course, that's bound to be open to debate – and a swift response came, unsurprisingly, from specialist consultants The Dairy Group, who immediately flagged up the fact that, while statistically correct, this should not be seen as allowing milk processors to pay less.

The Dairy Group's Nick Holt-Martyn, pointed out that with the UK just 16th in the EU milk price league, and paying six per cent below the EU average, there was still room for much improvement.

He said: "While producing profit from milk production is possible across the milk-price spectrum, changes in milk price can still have a dramatic effect on profitability. For an individual farmer a movement in milk price will affect profitability without affecting production costs.

"The retailer milk price premium is worth up to 3.8ppl, so the loss of a retailer contract would have a large effect on profitability, without much reduction in the production costs. Milk price needs to reflect market returns to enable producers to be competitive. With the UK consistently below the EU average, where is the export led expansion of competitively priced UK milk into the single market?"

Processors failed to deliver a share of market returns comparable with other EU countries, which was why the milk price would always be a key issue affecting profitability, even though individually milk producers have little power to affect a change, he stressed. The league table of average price payments is currently topped by Dairy Crest's M&S contract at 31.78ppl.