Arla announces 1.67p/litre milk price cut

Arla Foods amba members face a 1.67p/litre cut to their on-account price from 29 September.

This takes the UK standard litre price to 28.55p after a 2 euro cent cut.

Arla said the cut to its milk price reflects a fall in turnover, largely as a result of reduced commodity selling prices.

See also: Five charts that explain the milk price crash

The reduction also takes into account the next quarter’s currency exchange rate adjustment which will result in a 0.03p/litre reduction in the UK price.

Ash Amirahmadi, Arla UK’s head of milk and member services said: “Globally, milk production has increased by circa 4-5%, which is out of sync with a lower increase in global demand of circa 1-2%.

“This imbalance is resulting in large stocks and, as a consequence, markets have dropped sharply.

“Furthermore, Chinese demand continues to be sluggish and the Russian import ban is continuing to have an impact on European industry prices. This negative pressure is having a significant effect on Arla’s milk price.”

“Furthermore, Chinese demand continues to be sluggish and the Russian import ban is continuing to have an impact on European industry prices. This negative pressure is having a significant effect on Arla’s milk price.”

The co-op’s forecast for its 13th payment for 2014 has also been reduced to 0.65p/litre after being rebased in line with the company’s quarterly forecast but this does not affect the monthly milk cheque. The 13th payment will continue to be reforecast with the actual 2014 figure confirmed, usually in February.