The Arla Foods amba on-account price will reduce by one eurocent per kg from April 1. When applied to the UK standard litre it equates to a reduction of 0.75ppl.
April also sees a new quarter’s (January–March) average exchange rate being introduced to the pricing mechanism and this has a 0.19ppl negative impact on the milk price.
The reduction, coupled with the impact of exchange rates, reduces the UK standard litre price for conventional milk down by 0.94ppl to 20.87ppl.
The company pointed to the continued growth in milk production across Europe which it said continues to have an impact on the imbalance between conventional milk supply and demand. This is continuing to put pressure on commodity and cheese markets which is having a knock-on effect across other markets, it claimed.
Arla Foods amba farmer board director, Jonathan Ovens, said: “The milk price is definitely not at a level that anyone wants it to be, but the business is continuing to work hard to mitigate the negative effects of the hard-pressed global dairy market.
“We believe Arla has the right strategy to get through this, although the current situation is extreme for both Arla and everyone else in the global dairy market.”
NFU dairy board chairman Michael Oakes added: “We have seen UK milk production pull back since the turn of the year and according to AHDB Dairy volumes are one per cent down on this time last year.
“The NFU continues to urge processors to be honest and open with their suppliers and make it clear how they plan to get through the current market downturn. Arla says it has the right strategy – but are other farmers sure that’s the case with their own milk buyer. We need those discussions to happen now more than ever."