Arla holds March milk price and splits profits with farmers

Dairy co-op Arla Foods has confirmed the March milk price for its farmer-owners will remain unchanged on the back of stable European commodity markets.

Producers will receive 30.24p/litre for manufacturing litres with a constituent content of 4.2% butterfat and 3.4% protein from next month.

Farmers paid on liquid milk contracts of 4% butterfat, 3.3% protein will receive 29.07p/litre.

See also: Milk contracts: what farmers need to check

Overall, European milk volumes continue to remain under pressure, with volumes in the Netherlands, Germany and France all being lower than last year, according to Arla Foods amba board director Johnnie Russell.

“This has kept the European commodity market relatively stable into the first quarter,” Mr Russell said.

“Against expectations, butter prices have also held firm into the new year but have started to soften in the last few weeks.

“Skim milk powder prices have continued to increase in the face of strong global demand, while cheese prices are also firmer than normal for this time of year.”

Fellow dairy processor Muller dropped its milk price for March by 1.25p/litre, as communicated to farmers on 31 January.

This leaves the company’s producers at 26.25p/litre for volumes with a constituent content of 4% butterfat, 3.3% protein – nearly 3p/litre lower than Arla’s farmers.

Profit paid out to farmers

Arla’s board of directors has proposed a one-time pay out of the co-operative’s full net profit for 2018 of €290m (£252m) to its 11,200 European farmer owners. This will be paid out as 2.3 eurocent/kg of milk delivered to the co-operative, worth 2p/litre.

This was first proposed in August 2018 following the difficulties experienced by producers during the summer’s drought.

Arla Foods chairman Jan Toft Nørgaard said: “As a farmer-owned dairy company we care deeply about the livelihood of our farmers and we see how many of our colleagues have been affected by the drought.

“We have this exceptional opportunity to help them without putting our company at risk and I am proud that we have proposed to do so.”