Arla’s 0.42p/litre April milk price cut slammed

Arla’s decision to reduce milk prices by 0.42p/litre from 1 April has been criticised as too much too soon.

The NFU said it was concerned and disappointed at the move, which cuts the manufacturing standard litre price to 28.13p/litre, for those supplying at least 1m litres on every other day collection and in the top quality band.

The liquid standard litre price will drop by the same amount, to 27.03p/litre, based on 4% fat and 3.3% protein.

The actual reduction applied to the producer price is much larger at one eurocent/litre or 0.79p/litre. This is partly counteracted by the mechanism which the co-op uses to account for currency changes, which adds back 0.37p/litre to the price from 1 April.

But NFU chief dairy adviser Sian Davies said the mitigation merely masked the significant scale of the price cut.

See also: Arla members to receive £9,000 bonus

“We want to clarify that this is a significant cut to milk prices,” Ms Davies said.

“It is extremely disappointing and comes as farmers are still recovering from the low prices seen in the past two years.”

She added that Arla had acted too quickly to market changes.

“We know processors are watching the wholesale market which has come back slightly and that they are concerned about the spring flush in production.

“But this cut has been made too quickly and goes against all the work the industry has been doing to reduce risk and volatility in the market.”

Risk reduction

Ms Davies pointed out that the whole supply chain was due to hold talks on 6 April to look at finding ways of reducing risk across the sector.

“We need to keep pushing for mechanisms that will help us all reduce risks to benefit everyone in the chain.

“That is why Arla’s decision is such a disappointing move,” she said.

Arla Foods amba board director Johnnie Russell said the decision had not been made lightly.

“Over recent weeks, the reduction in commodity prices has impacted yellow cheese, protein and spot market prices and this is putting pressure on the European market in particular,” he said.

Disappointed

“We are extremely disappointed to be in a position of having to reduce our milk price to our owners, after seven consecutive increases.

“During that period, we have delivered an additional £76 million in milk price increases to our owners since September 2016. The reduction in our April price is unwelcome news,” he said.