UK: Arla Foods makes largest cut to milk price
- Arla to cut milk price by 2ppl
Arla will reduce the standard litre price by 2ppl with effect from 1 August
Arla Foods has implemented the largest cut yet of three other major UK milk processors in the last week to have reduced their farmgate milk prices.
In the latest round of price-cutting, Arla said in a letter to its members this week it will reduce the standard litre price by 2ppl with effect from 1 August, resulting in a 7.5% cut to 24.5 pence.
The company said its business performance has "continued to suffer", primarily due to the "ongoing impact of depressed commodity prices".
The cut, however, is just the latest of a number of reductions announced already this week. First Milk this morning blamed declining returns from customers in the liquid milk market for its decision to reduce its liquid pool price by 6.5% or 1.7ppl to 24.35 pence, and its balancing pool price by 0.9ppl.
Dairy Crest also moved to make a 6.2% or 1.65ppl cut this week to 25 pence, while Robert Wiseman Dairies' decision to cut prices by 6.4% or 1.7ppl on Monday to 24.73 pence was met with criticism from the National Farmers Union (NFU), which slammed the decision as a "catastrophic example of hypocrisy and unfairness".
Change in milk price
Unfortunately we must inform you that the standard litre price will reduce by two pence with effect from 1 August 2012 taking the standard litre* to 24.5 pence and our non-aligned price to 25 pence. This move follows an agreement reached between Arla Foods and your representatives on the AFMP board.
Following our communication in May, business performance has continued to suffer, primarily as a result of the ongoing impact of depressed commodity prices. Where possible, this has been addressed internally through a reduction in headcount and marketing spend.
Arla Foods is also continuing its dialogue with customers with a view to recovering more money from the marketplace, however net of all these activities there remains a requirement to reduce the price paid for milk supplied by AFMP members and all other suppliers.
We acknowledge that this will be unwelcome news to AFMP members and Arla Foods, along with the AFMP board, will continue to put all of our efforts into creating the conditions for the milk price to recover at the earliest opportunity.
If you have any questions regarding the contents of this letter, please contact either your Arla or AFMP representatives.
Jonathan Ovens Ash Amirahmadi
Chairman - AFMP Head of milk buying - Arla Foods UK
Original source: Arla Foods
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