Arla Foods UK said it was forced to reduce the price it paid farmers by 0.9ppl to offset falls in commodity values. This was in spite of the fact that it was receiving an extra 2ppl from retailers for milk.
It blamed increasing sales of lower fat milk for a surge in cream volumes available.
Arla director of milk buying Peter Walker said: “Improvements in returns from our customers mean oil and utility inflation is now dealt with for Arla Foods. The impact of reducing commodity prices is an entirely separate issue.” Walker said that Arla Foods was introducing a new “market-related” system of paying farmers for milk, that was linked to its sales. He added: “We see this milk price reduction as a stepping-stone towards a more stable and transparent future pricing policy.”
NFU chief dairy adviser Tom Hind said the cut was “morally reprehensible”. He added: “What Arla is saying about the long-term perspective is meaningless at this stage. We want to see some flesh on the bones.”