Now Arla slashes farmgate milk price

Arla has become the latest dairy processor to slash 2p per litre off the farmgate milk price.

The Leeds-based processor sent a text message to dairy farmers informing them of the decision on Wednesday (2 May).

A letter from the company to its farmer suppliers will follow, with an official announcement due to be made on Thursday (3 May).

The Arla price cut takes effect from 1 June.

It follows 2p per litre cuts by Dairy Crest and  Robert Wiseman Dairies.

Dairy Crest was first to slash its milk price, giving farmers just four days notice of its reduction, which came into effect on Tuesday (1 May).

It takes the standard litre price for 575 producers to 26.61p/litre – an estimated 3.7ppl below the cost of production.

Dairy Crest insists it remains “totally committed” to its 1300 dairy farmers – despite a voluntary agreement that should have given producers 30-days notice of a price cut.

The reduction had been delayed as long as possible, said milk procurement director Mike Sheldon.

“We know that milk production costs remain high and that this will be a blow to those of our farmers who are affected,” said Mr Sheldon.

“However, the market pressures on our dairies business mean that we have no alternative.”

The Wiseman cut – which takes the price of a standard litre to 26.42p – comes into effect on 1 June.

The company said the move reflected the continuing and sustained impact of a “challenging market environment and more recently a collapse in the value of bulk cream”.

Farm leaders are calling for government action unless processors give farmers more say over milk prices, rather than locking producers into contracts where prices can be changed by buyers.

In a letter to milk producers, NFU dairy board chairman Mansel Raymond said: “The market place for milk at the farm gate is broken – too many farmers are held over a barrel by their processors because of the terms of their supply contract.”

Producers were too often adversely affected by poor contracts, agreed Dei Davies, milk committee chairman at the Farmers’ Union of Wales.

“They may be required to give 12 or more months’ notice to pull out but the price the farmer is paid can be changed at a few days’ notice  by the processor.”

A DEFRA spokesman said: “Farmers need better bargaining power to generate a bigger share of revenue, which is why we’re fully behind the industry’s work to produce a voluntary code of practice on contracts that will even out the balance of power.”