After a week or more in which the world has become an ever gloomier place, it seems that even the nation's milk producers might seem ready to reach for something a little stronger. Dairy Crest, the chilled foods company, announced plans yesterday to close one of its dairies, cut jobs and continue raising prices.

In a trading update, it said that its markets had been hit by the rising costs of raw milk, vegetable oils, packaging, energy and fuel. It said that it was counteracting these through a programme of cost-cutting and price increases. Reorganising its head office and other support functions would deliver “significant cost savings next year”, it said, adding that it would hold a 90-day consultation with staff over the possible closure of its Nottingham dairy and bottling plant, putting 215 jobs at risk.

It insisted that first-half trading had been in line with its expectations, with double-digit sales growth from most of its key brands, including Cathedral City cheese, Clover and Country Life butter and Petit Filous mini-yoghurts. The group lifted fresh milk volumes to multiple retailers such as J Sainsbury and Morrisons, but doorstep deliveries to households had fallen by 10 per cent after the price increase in May.

Mark Allen, chief executive of Dairy Crest, estimated the full-year rise in non-milk costs at about £40 million.

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