Arla is the latest processor to announce a milk price rise, with members set to receive a 0.32p/litre increase from 1 October.
Denmark-based Arla calculates its milk price in euros and, taking its quarterly currency-smoothing mechanism into account, the standard manufacturing litre (4.2% butterfat and 3.4% protein) will increase to 32.62p/litre for conventional milk and 40.98p/litre for organic milk.
This equates to a standard liquid litre at 31.39p/litre for milk with 4% fat and 3.3% protein.
The UK’s biggest cheese manufacturer said high demand and lower availability during August had resulted in pricing for all European dairy commodities, especially cheese, significantly increasing.
Arla Foods amba board director and farmer owner Arthur Fearnall said a shift in global demand from China, Asia and the Middle East was supporting positive development in global milk powder prices.
European milk intake in July declined, while the August figures indicated no change compared with last year. The outlook remained stable, Mr Fearnall added.
Ash Amirahmadi, managing director of Arla UK, said the increase would be welcomed by farmers, who were experiencing inflationary on-farm costs.
“Consumers are looking for brands that have sustainability at their core, so giving our farmer-owners confidence to invest, ensuring a sustainable future for dairy and ensuring the most value for our farmer-owners for the milk they produce are crucial to our commercial decisions,’’ he says.
The firmer outlook for milk prices was endorsed by a 1% ride in the Global Dairy Trade index this week. The online auction is an indicator of market sentiment and increased by 1% in the latest fortnightly sale (21 September).
The auction’s two largest traded commodities, whole milk powder (WMP) and skimmed milk powder (SMP), both saw increases.
WMP increased by 2.2% to a weighted average of £2,765/t, while SMP made a gain of 0.9% to average £2,417/t.