The co-operative will supply Morrisons’ own-brand liquid milk from March 2018.
Morrisons has announced a three year contract with Arla to exclusively supply its own-brand liquid milk from March 2018.
Michael Oakes, NFU dairy chairman, said it was good news for Arla farmers if the contract had been secured for the right reasons.
“Let us hope Arla won the contract for reasons of service and something other than price,” he said.
He warned if it was purely due to low prices, farmers would be the ones hit by it.
While Morrisons previously sourced the majority of its milk from Arla, a minority was purchased from Muller, which took over the contract when it purchased Dairy Crest Dairies.
Steve Newbould, Morrisons head of trading - dairy, said: “We believe this agreement will be simpler for our business and will help to develop a sustainable dairy sector.”
He added the processor wanted to work closely with farmers on ‘a range of sustainability and animal welfare measures’.
George Jamieson, NFU Scotland milk policy manager, said the union wanted any deals to take into consideration a fair return for farmers.
“Morrisons were happy to discuss with us. They are keen to promote themselves as a business which works well with producers,” he said.
“They reassured us it was not solely to do with price; the implication was, it was partly due to Arla being a co-operative.”
Morrisons also committed to enhancing its regional and local milk offering as part of a wider commitment.
Mr Jamieson said this was good news for producers.
“But what we are striving for are contracts which are fair to everybody. Producers have to benefit from it,” he said.
Mr Oakes added he hoped Morrisons would work to soften the impact on Muller farmers.
“It is not until next March so it gives Muller time to readjust,” he said.
“They will want to keep their market share.”
A spokesman for Muller said it had ’no impact’ on its milk field.
“Morrisons remains an important and valued customer for our business and we continue to provide a range of Muller branded dairy products including FRijj flavoured milk and our range of yogurts and chilled desserts, to support their dairy category offering to consumers.”