Hundreds of Cumbrian dairy farmers have been told their contracts with confection giant Nestl� are being scrapped.

The company says it is no longer cost-efficient to continue buying in milk for its factory at Dalston, which is shedding 24 jobs.

Farmers will be given the option to sell milk to a co-operative instead.

The National Farmers Union (NFU) says the news is a bitter blow as farmers were beginning to re-stock after foot-and-mouth.

'Buying less'

Nestl� is ending condensed milk production in Dalston to concentrate on cappuccino and coffee creamers.

David Stevenson, the head of Nestl�'s milk business unit, said: "We currently have an over-supply of milk.

"Our demand for milk has gone down and people are buying less of the traditional milk products we make.

"We have been talking to First Milk, a very large co-operative group, and looking to them to supply us with milk.

"All of our farmers will have the opportunity to supply First Milk."

Very worried

But Nick Utting of the NFU in Cumbria, said: "We were just seeing some signs of improvement in the industry and then find Nestl� is cutting production.

"It reduces confidence and makes everyone very worried about their future just a time when we were starting to restock after foot-and-mouth.

"We cannot see this continuing contraction of British agriculture, especially in Cumbria.

"Agriculture is so important to Cumbria that we have to preserve the number of farmers in the county."