Avonmore Foods has become the first dairy processor to cut the price it pays farmers for milk and is to the price for milk supplied in January by 3p to 100 1/2p a gallon.

Industry sources believe that, to protect margins, the major processors need to cut 10p off the current milk price which range between 103p and 105p. Kerry Group's board meets tomorrow to discuss milk prices, while a crucial meeting of the Dairygold takes place on Monday when the milk price will be high on the agenda. The Waterford Foods board meets next week.