Arla milk price cut prompts urgent action call to help dairy farmers

Dairy cows at Shipdham. Picture: Matthew Usher.

Dairy cows at Shipdham. Picture: Matthew Usher. - Credit: Matthew Usher

The dairy industry has been hit by another 'body blow' after one of the country's largest milk processors confirmed it was cutting the price paid to its members.

Farmer-owned co-operative Arla has today announced it will lower the price of a UK standard litre by 1.18p from July 6, taking it to 23.81p per litre.

The company said the cut was forced by a continued downward trend in world commodity prices.

NFU (National Farmers' Union) dairy board chairman Rob Harrison said this latest in a series of damaging price cuts highlighted the urgent need for the industry and the government to come up with immediate, short-term solutions.

He said: 'This is yet another body blow to dairy farmers whose businesses have been in utter turmoil for the past 12 months, with 450 quitting dairy farming since this time last year in England and Wales.

'We need government to move away from paying lip service and focus on the here and now. Their long-term solutions must take a back seat while we focus on the immediate crisis; we need them to insist on best practice in the supply chain, look at growing dairy consumption and supporting more investment in dairy processing in the UK – and this needs to happen now.

'We also urgently need milk-buyers to be more transparent in pricing. Although there are a few clear formulas employed by milk processors, these are few and far between. We need all processors to improve transparency in pricing and must stop idly following one another to the bottom; this is a dire situation and we need to see the dairy industry pull through this period of volatility.

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'Government has a role here in insisting processors provide up-to-date market and production data so that the whole supply chain can better understand what's happening and how to manage risk in the future.'

The Arla on-account price will reduce by one eurocent per kg with effect from July 6. When applied to the UK standard litre, the impact will be a reduction of 0.77p plus a 0.41p per litre deduction from the 'currency smoothing' mechanism taking it to 23.81p per litre.

Arla's head of UK milk and member services, Ash Amirahmadi, said: 'Commodity markets are continuing their downward trend, despite only a minor reduction in prices in the latest GDT auction. While we have taken significant mitigating actions, the impact has been felt on our traded business and more recently on European markets which are also in decline.

'Unfortunately, these factors are affecting the entire dairy industry and despite our efforts it has not possible to buck the trend. I can confirm that our customers in the UK are supporting us at this very difficult time for our members.'