Cyprus police said Thursday they had arrested one man a day after farmers set hay bales ablaze outside the presidential palace to protest against high input prices and a milk glut.

The goat and sheep farmers also emptied milk churns at the gates of the palace and police say they have issued arrest warrants for two other people who took part in the 300-strong demonstration.

The farmers face a unique squeeze driven in part by the war in Ukraine, which has propelled the cost of wheat and fuel higher, making it more expensive to feed and transport their animals.

On top of that, farmers have been unable to sell all their sheep and goat milk because, they complain, producers of the Mediterranean island's renowned halloumi cheese are opting largely in favour of cow milk, a cheaper alternative.

Cypriot goat and sheep farmers face a squeeze driven on one side by higher input costs and on the other side by halloumi producers opting largely in favour of cheap cow milk Cypriot goat and sheep farmers face a squeeze driven on one side by higher input costs and on the other side by halloumi producers opting largely in favour of cheap cow milk Photo: AFP / Amir MAKAR

Halloumi exports earned Cyprus 266.5 million euros ($279 million) in 2020 and last year won Protected Designation of Origin (PDO) status from the European Union, giving the country a monopoly on producing halloumi branded cheese.

The PDO status is also meant to ensure minimum quotas for the use of goat and sheep milk in the production process, but the farmers accuse halloumi makers of flouting that.

Police spokesperson Christos Andreou told state broadcaster CyBC that video footage of Wednesday's protest was being reviewed and suspects face charges of reckless behaviour and conspiracy to commit a crime.

The one man arrested so far is 42 and has been charged in writing and released to appear in court at a later date.

Agriculture Minister Costas Kadis said goat and sheep farmers' anger was "justified" and pledged more financial support.