Arla has announced a January price drop but the full drop has been mitigated by positive movement in the price currency exchange rate.
NFU Scotland has expressed disappointment after its fears the ‘huge milk price cut’ from Muller would see others follow was realised as Arla drops its price.
Arla has announced a 1.3ppl price drop taking the standard manufacturing litre price to 31ppl from January 1.
But the full extent of the Arla Foods Amba 2.5 eurocents reduction was mitigated by a positive movement in the currency exchange rate of 0.64ppl.
And the reintroduction of the money used to balance the UKAF cash flow, between July and December 2017, equated to a further 0.21 ppl.
NFU Scotland Vice President Gary Mitchell, a dairy farmer in Stranraer, said it was disappointing the price benefits from the currency exchange and the new ArlaGarden farm assurance initiative ‘have been eradicated in one fell swoop’.
“It is disappointing that the farmers involved in the ArlaGarden scheme have had to adhere so stringently to the qualifying criteria only for one price drop to leave many of its benefits lost.
He added he was disappointed with commentators talking down the market as it was ’encouraging price volatility at a time when stability and balance must be sought’.
“At our recent Milk Committee, a presentation from AHDB Dairy gave a more realistic and rational perspective on the current marketplace for dairy which did not support the irresponsible tack that some commentators have been taking that risks dragging us from one price crash to another.
“It is crucial that we make our UK Dairy Industry sustainable for the long term especially as we get nearer Brexit.
“There is a real need for a transparent supply chain that can accommodate a margin for producer, processor and retailer and, with markets softening, we need clear signals from our processors and co-ops that all efforts are being made to ensure milk prices reflect true markets rather than those of fantasy ‘futures’ markets.”
The January on-account price includes the Arlagarden Plus incentive.
Arla Foods amba board director, Johnnie Russell, said: “The reduction in the milk price is a consequence of the recent significant falls in commodity markets where we have seen reductions in butter and cheese prices of circa 30 per cent in the last two months.
“This has impacted across all markets and these factors have resulted in the reduction in the milk price.”
Arla added the ONE milk collection initiatives which take effect from January 1, could increase the price by up to 0.7ppl.