Arla Foods is reducing its global farmgate milk price by 1 eurocent per kg from Monday (25 May).
The price reduction – in place throughout June – translates to a reduction of 84p when applied to a UK standard litre, bringing the farmgate price down for British Arla farmers to 24.99ppl.
After a brief market upturn earlier this year, Arla increased its milk price by 1.5 eurocent per kg in April, and maintained it into May (equating to a UK price of 25.8ppl, rising slightly by 0.03ppl in May due to currency fluctuations).
However, ongoing negative trends in in the commodity markets eventually took their toll, said Arla UK’s head of milk and member services Ash Amirahmadi.
“Whilst we continue to do everything possible to minimise the impact, unfortunately, we have not been able to buck the market. The entire global dairy industry has been affected by these market forces.”
The National Farmers Union described the cut as “yet another major setback”, and warned that UK farmers were struggling to stay afloat, with milk prices already at unsustainably low levels.
“I cannot emphasise how important it is that other processors base the price they pay their farmers on their own product mix and continue to search for maximum value throughout the supply chain, rather than idly following one another to the bottom,” said NFU dairy board chairman Rob Harrison.
“Global markets, which rallied in January and February, have fallen back again, with this week’s global trade auction falling by 2.2 per cent, leaving commodity markets in the worst position we have seen in years,” he added.
“We have passed the UK spring flush peak and spot prices have improved slightly but there is little respite on the horizon for the dairy sector and it is going to be intensely painful for a lot of dairy producers in the short term,” Harrison warned.