Arla farmers are set to see a 0.63ppl price cut in July after the co-operative warned it was still feeling the effects of a demand shortage caused by the coronavirus lockdown.
The processor has confirmed prices for conventional milk will decrease by 0.75 eurocent per kilo, while the UK organic price will fall by 1.5 eurocent from July 1, bringing milk prices to 29.26ppl and 37.62ppl respectively.
It comes after the Government launched a consultation on unfair practices in the dairy sector, which revealed dairy farmers are subjected to uncertainty and unfair pricing due to the power of milk buyers to set and modify prices in contracts with little notification.
Prices quoted include the bonus for farmers who have completed their Arlagarden and Climate Check data.
Graham Wilkinson, UK agriculture director at Arla, said: “Despite significant redeployment measures and the start-up of the food service sector, our organic demand continues to be disproportionately affected by the Covid-19 disruption.
“Therefore, regrettably, we need to reflect the lower returns in our organic milk price while continuing to work with consumers to try and minimise the Covid-19 impact."
However, 0.63ppl drop will see Arla retain its lead with the top market price during a time of severe market disruption.
Arla board director, Arthur Fearnell, added: “The UK organic market is seeing an imbalance between supply and demand in addition to Covid-19 uncertainties, which is acting negatively on that market.
"Other organic markets remain stable, though subject to the same uncertainties from Covid-19 as the rest of the dairy market but, overall, the current outlook seems to be stable.”