Arla adds 3p/litre on to December farmgate milk price
© Tim Scrivener A rise of just over 3p/litre for Arla members gives farmgate milk prices a big boost from 1 December and puts further pressure on those yet to make any significant moves, including retailers.
The lift takes the co-op’s December price to 36.68p/litre for its standard manufacturing litre of 4.2% butterfat and 3.4% protein.
Organic members missed out on a rise last month but in December will also get a 3p/litre-plus uplift, putting their farmgate price at 44.13p/litre.
See also: Promar predicts another big jump in dairy cost of production
Arthur Fearnall, Arla Foods amba board director and farmer owner, said: “Pricing for all EU dairy commodities, especially butter, has continued the strong positive development in October.”
The record-level farmgate price increase was needed at a time of significant inflationary pressure impacting on-farm costs and milk production, said Ash Amirahmadi, managing director for Arla Foods UK.
“We are working closely with our customers to secure the continuity of supply to meet demand leading up to Christmas, as well as a continued supply of sustainable dairy into 2022 and beyond,” said Mr Amirhamadi.
Board vote
Last month, a vote was taken by the board to guarantee a minimum supplementary or 13th payment of 1.5 eurocents/kg (1.19p/kg at today’s rate) to be paid to members in March.
As with Medina’s recent announcement of a 3p/litre increase for January and Muller’s additional 2p/litre for its 600 direct suppliers for the same month, the cost pressures on farm are being recognised by a growing number of processors.
Fears over a likely drop in supply because of those cost pressures are raising hopes for some real movement from retailers in the near future, with processors also suffering rapidly rising packaging, energy and logistics costs.
The Muller announcement came earlier than usual and followed six upwards moves in the past seven sales by the fortnightly New Zealand-based Global Dairy Trade auction of bulk dairy commodities. This pushed the index to its highest level since 2014.
Supply tightening
Milk supply is tightening, with relatively low autumn deliveries playing out in rising wholesale market values and recent milk price increases, said AHDB Dairy.
However, it added that the price increases are unlikely to be enough to stimulate higher production while farmers continue to face escalating input costs.
GB milk deliveries for October were 1.012m litres – 1.5% below the previous year’s volumes and 0.8% below AHDB Dairy’s forecast.
Production for April to October this year was 7,365m litres, equivalent to a drop of 18.8m litres (0.3%) on the same period last year.