The fallout from Arla Foods’ decision last week to cut the price it pays farmers for milk is threatening to shatter the fragile harmony in dairy supply.
Farmers For Action boss David Handley called out members to picket Arla depots and demanded the resignation of the Arla Milk Partnership chairman Jonathan Ovens, who backed the cut.
The dispute put new Arla chief executive Tim Smith in the firing line. Industry analyst Ian Potter claimed the cut would “massively taint it [Arla], and him [Smith], in the eyes of the retailers”.
The major multiples agreed in March to increase the retail price of milk by 2p per pint on
the basis that at least half was passed on to farmers. This requires co-operation by processors, who pay farmers for the raw milk they process. The price cut of 0.35ppl by Arla flies in the face of this initiative.
An official response last week by the NFU was guarded. However, dairy chairman Gwyn Jones later issued a strongly worded statement subsequently posted on a web site, in which he called on farmers to take action against the company. He included Smith’s mobile phone number. Arla ordered solicitors’ letters to be sent out, claiming the publication of the number breached data protection laws. The web site took Jones’s statement down.
Arla insiders told The Grocer that the company had seriously underestimated the vehemence of farmers’ response to the cut.
Smith said: “The recent reduction of 0.35ppl puts the Arla June price at 19.65ppl compared to the average Robert Wiseman price of 19.94ppl and the Dairy Crest price of 19.5ppl. Prices are therefore pretty much in line, reflecting the different business mix of each company, and there is no justification for our action to be cited as the trigger for further downward movement in the market.”
Chris Walkland