Robert Wiseman Dairies reported a 22 per cent fall in profits yesterday and said tough trading conditions would force it to review milk prices.

Wiseman said it was selling its milk at a "significant premium" over its rivals after guaranteeing its price until January.

It said: "Given the competitive market place in which we operate, the current level of premium cannot be maintained and we will be seeking to narrow the gap in early 2006."

The company gave no indication of what that may mean for its farmers, who are paid more than those supplying rival dairy companies.

The group revealed that pre-tax profits fell to £12.1m in the six months to October 1, following higher fuel and raw material costs.

The group said the outlook for the rest of the financial year would be influenced by the cost of oil, energy and plastic for bottling milk.

Robert Wiseman has a fifth of the British market, supplying about 1.3 billion litres of milk a year.

New supply contracts with supermarkets Sainsbury's and Tesco drove a 13.2 per cent rise in milk volumes to 687 million litres.