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July 27, 2012

UK: Arla U-turn on milk price cut

Arla Foods has become the next UK dairy processor to reveal it will no longer implement plans to cut milk prices next week.

Arla Foods has become the next UK dairy processor to reveal it will no longer implement plans to cut milk prices next week.

The dairy giant said it could “maintain” its milk price because it had recovered money from its customers and through increasing its “non-aligned” premium. 

After discussions with customers and representatives of Arla’s Milk Partnership, the company has increased its Cravendale premium and recovered two pence per litre.

Ash Amirahmadi, Arla’s head of milk procurement, said: “I am pleased to confirm that Arla is in a position to maintain a standard litre price of 27 pence for non-aligned members of Arla Foods Milk Partnership. We have agreed a transparent reconciliation method with our customers and our supplying farmers to demonstrate that all of the money recovered from the marketplace has been paid out in full.”

Arla originally planned to reduce the standard litre price by 2ppl from 1 August, cutting the price 7.5% to 24.5 pence.

The co-op, however, was not alone in planning to cut prices. Rivals including Dairy Crest, Robert Wiseman Dairies and First Milk also proposed lowering prices, prompting angry protests from farmers.

After days of protests and blockades, Dairy Crest said yesterday (26 July) it will postpone its planned 1.65 pence per litre milk price cut for two months but added a 2ppl cut already in force still stands.

First Milk, meanwhile, “withdrew” its plans for a cut. Wiseman told just-food today it remains in talks with farmers.

When asked whether Arla could again look to reduce its milk price later this year, a spokesperson said: “Just as a price increase would be a consequence of improved returns from the commodity markets, lower market returns would result in a reduction in the price paid to farmers.”

Commenting on the protests that have taken place at Arla sites, the spokesperson told just-food: “There was minimal disruption to our deliveries to customers.”

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