The Arla Foods amba price will drop but the UK price will be ’balanced’ by expected future benefits from currency
Arla Foods amba has announced a milk price drop of one eurocent per kilogramme, but will maintain the current UK price in May.
The conventional standard litre price in the UK will remain at 28.13ppl
In the UK, the UKAF board has used expected future benefits from the currency exchange mechanism to ‘balance’ the milk price throughout May.
It follows a drop of 0.79ppl last month, which was reduced to 0.42ppl by the currency smoothing mechanism.
Jonathan Ovens, Arla Foods amba board director said: “The one eurocent Arla Foods amba reduction has been fully reflected in UKAF’s cash flow.
“However, to avoid the unintended consequence of a double on-farm impact of a milk price reduction at the same time as maximum seasonality deductions, the board has adopted a pragmatic and prudent approach to use expected future benefits from the currency exchange mechanism to balance the milk price throughout May,” he said.
“Over the calendar year of 2017, and in accordance with Arla’s farmer-owned principles, the cash flow will be balanced and money in will equal money paid out.
“The UKAF board will continue to carefully monitor the cash flow and ensure that the integrity of the Arla Foods amba payment model is protected.”
NFU dairy board chairman Michael Oakes said although the price reduction was disappointing, he was pleased that the UKAF board had recognised the fragility of UK members and decided to act accordingly.
He said: “Although we have seen improvements in dairy markets since the lows of last year, many dairy farmers remain in an extremely fragile place.
“They lack confidence in the future of the sector - compounded further by the impact and uncertainty of Brexit and the forthcoming General Election.
“All dairy farmers need a period of stability to recover from the downturn and prepare for the future. That’s why we need to look at new ways of managing risk and sharing reward.”
Arla dairy farmer Georgina Fort, said last month she felt 'bitterly disappointed' by the cooperative after it announced a price drop after being told about the positive progress on the Arla brand.
"A neighbour is on a local dairy and received 29p last month whereas we are a with a huge co op and are worse off.
"The announcement today, it is better then a decrease but there must be an increase next month," she said.