Arla criticised after latest milk price cut

The NFU has questioned Arla’s dairy downturn strategy, after Britain’s biggest processor cut its milk price for the second month running.

NFU dairy board chairman Michael Oakes said the co-op’s 2,700 UK farmers were right to ask if the plan to move milk into higher-value markets was working.

He also suggested processors and suppliers could collaborate on efforts to manage milk supplies. 

After follow-up questions from Farmers Weekly, the NFU pointed to Arla pushing the same messages about its strategy month after month, despite milk prices falling further since the start

And milk supply deals, such as Dairy Crest’s new balancing contract, showed producers and processors could negotiate and control volumes in a way that worked for both sides, the union added.

See also: What is Article 222 and can it save dairy?

Arla’s May milk price, announced on Thursday (21 April), will fall 0.75p/litre to 20.12p/litre.

“Farmers are fully aware that the imbalance between global supply and demand and cheese stocks are high,” Mr Oakes said.

“Arla’s strategy to manage this dairy downturn is to move the extra milk volume into branded sales and food service, but members can rightly ask how effective this is at the current time.

“Managing milk supply is important, but needs to be done collaboratively between processors and their suppliers with an understanding of what it means for both parties.” 

The NFU and British government have shown no interest in invoking article 222. This barely known EU rule allows groups of dairy producers to collectively cut back milk output for up to a year — without breaking competition laws.

Several UK dairy firms have brought in A and B deals, paying a spot rate for any milk produced above a fixed volume. 

But none have followed Dutch co-op FrieslandCampina, Arla’s top European rival, which paid farmers to drop milk supplies in January and February. 

Instead, the NFU has highlighted the UK’s dairy deficit, calling for greater sourcing of British dairy producers in retail, food service and manufacturing.

In a statement, Arla blamed the “competitive market environment” for its latest price cut.

“The continuing decline of milk price is of deep concern to all involved in the dairy industry,” said Arla farmer board director Johnnie Russell. “The entire world market is at an unsustainably low level right now.”

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