The rising cost of bottling milk has squeezed Wiseman

The news came as the group revealed profits had slumped 22% to �12.1m in the six months to 1 October as a result of higher fuel and raw material costs.

In the past month alone, plastic prices had surged from �200 per tonne to �860 per tonne, Wiseman said.

"Our target is to re-build margins in the period ahead, but higher costs clearly make this difficult," it added.

"The outlook for the year... will be influenced by oil, energy and plastic costs during the second half and the extent to which we can make recovery of these increased costs," said chairman Alan Wiseman.

Price worries

He added that the company was selling its milk at a "significant premium" over its major rivals after guaranteeing its price until January next year.

Such premiums could not be sustained, he added, but declined to say what this would mean for its farmers.

In September, Scottish dairy farmers blocked the group's depots in East Whitburn and Cambuslang in protest at the amount they are paid for milk - blaming supermarkets for demanding ever lower prices from suppliers.

Between July and September, Wiseman Dairies cut the price it pays for milk by 0.6p a litre - but added that despite the reduction it was still paying the best price in the UK.

Robert Wiseman supplies about 1.3 billion litres of milk each year, and has a 20% share of the UK market.

Supermarket deals

New contracts to supply fresh milk to Sainsbury's and Tesco helped it to offset the loss of its deal with Asda, which ended in November last year.

The new agreements helped push milk volumes 13.2% higher to 687 million litres while turnover increased by 14.7% to �281.3m.

But a �40m contract with Morrisons finished at the end of October and is expected to hit full-year results.