Arla annouces changes to milk pricing arrangements

Alra has announced changes to its milk pricing arrangements to a bid to make payments to its members “fair and accurate.”

From Sunday (October 1), payments to members of Arla’s milk partnership will be split into two parts.

Farmers will receive a core price, while a variable element will be introduced, reflecting year-on-year changes in returns from the commodity market.

This will result in additions or reductions from the core price.

Pater Walker, Arla Food’s director of milk buying, said the method would provide a transparent and responsive pricing model.

“We believe this is a fair and accurate way in which to translate market movements into producer prices,” he said.

Mr Walker said if commodity returns continued to strengthen, deductions would continue to reduce and there would be potential for that to “turn into a plus” in the milk price.

“This is the quickest and fairest way we can devise to ensure market reality is reflected in farm-gate milk prices,” he added.

For further information and industry reaction, see this week’s Farmers Weekly.