Poor exchange rate limits Arla October milk price rise
© Tim Scrivener A weaker sterling has cut the amount by which prices will rise for Arla’s UK members in October.
Arla’s overall European farmgate member milk price is set to increase by one eurocent/kg in October but the co-op’s quarterly currency smoothing mechanism cuts the UK members’ price rise by 0.33p/litre to deliver a 0.55p/litre increase.
This will result in UK producers being paid 50.91p/litre during October.
See also: Weaker pound set to boost cheese exports and tighten supply
Prices are based on a standard manufacturing litre price with 4.2% butterfat and 3.4% protein on every-other-day collection. This price also includes the guaranteed minimum supplementary payment, which will reduce from 1.339p/litre to 1.329p/litre.
In October, prices will be up by 14.23p/litre for the year to date and 18.29p/litre above October 2021 levels.
Arla Foods amba board director, and farmer owner, Arthur Fearnall, said: “This month’s increase to our farmgate milk price for conventional milk comes following yet another rise in European commodity prices.”
A standard liquid litre of 4% butterfat and 3.3% protein increases by 0.54p/litre to 48.96p/litre for Arla producers.
Those on UK Arla Farmers Tesco contracts will see a price rise of 0.54p/litre to 50.38p/litre for October for a standard liquid litre.
UK Arla Farmers Morrisons producers will be paid an October price of 50.35p/litre, while those on UK Arla Farmers Morrisons grazing contracts will be paid 50.58p/litre for a standard liquid litre. According to milkprices.com.
Organic price
Arla’s Euro-based on-account organic price in October is technically not moving. However, the reduction in the value of the pound means that after the co-op’s calculation of its currency smoothing mechanism, the price for an organic manufacturing standard litre will fall by 0.32p/litre to 55.69p/litre.
The price for a standard organic liquid litre will reduce by 0.3p/litre to 53.57p/litre.
This tightens further the gap between organic and conventional prices.
Mr Fearnall said at the current high pricing levels, organic demand is under pressure. Nonetheless, it was reassuring to see a stabilisation in the overall supply of milk across Europe, he said.
Paul Savage, agriculture director for Arla UK, said: “There is no doubt that the organic market continues to face challenges as consumers trade down in the light of the sustained inflationary pressure.
“However, as a co-operative, we continue to monitor these developments and remain committed to supporting the products our organic farmers work hard to produce.”