The Arla Foods amba on-account price will reduce, with effect from 1 May 2016, by one eurocent per kg.
When applied to the UK standard litre it equates to a reduction of 0.75 pence, taking the UK standard litre to 20.12 pence.
The imbalance between global supply and demand continues to significantly impact the market. In addition, cheese stocks remain high. These, coupled with the very competitive market environment, have generated a further downward pressure on prices.
Arla Foods amba Farmer Board Director, Johnnie Russell, commented: “The continuing decline of milk prices is of deep concern to all involved in the dairy industry and the entire world market is at an unsustainably low level right now.
“Arla is doing all it can to mitigate the downturn of the markets and is working hard to move the extra milk volume from our farmer owners into branded sales and foodservice. However, even those areas are also now being affected by the global imbalance between supply and demand.”
Arla is also informing its farmers supplying milk on a direct contract of a 0.9 pence per litre reduction in the milk price taking it to 15.1 pence from 1 June 2016.
NFU dairy board chairman Michael Oakes said: “Arla’s latest announcement on a 0.75ppl cut to the May milk price is yet another huge blow for hard pressed dairy farmers across England and Wales. Farmers are fully aware that the imbalance between global supply and demand and cheese stocks are high. Arla’s strategy to manage this dairy downturn is to move the extra milk volume into branded sales and foodservice but members can rightly ask how effective this is at the current time?
“With ideas on supply management and quotas we must remember that the UK is not self-sufficient in dairy products and that we are in a dairy trade deficit. That’s why the NFU will continue to call for increased sourcing of British dairy products at retail, food service and manufacturing to negate that trade deficit and support our dairy industry for the long term. Managing milk supply is important but needs to be done collaboratively between processors and their suppliers with an understanding of what it means for both parties.
“In the short term action is needed to support farmers through the immediate dairy downturn. That’s why the NFU worked with AHDB Dairy in developing #decisions4dairy, securing buy-in from the allied industries to signpost, promote best practice and ensure farmers are getting the correct guidance.”
