Arla’s on-account price will drop by 2.5 eurocents per kg from January 5 2015, according to its announcement today (December 23). The combined impact of this and 13th payment changes takes the quoted UK standard litre to 24.81 pence per litre (ppl), a total decrease of 2.03ppl.
The NFU warned that another severe cut will be devastating for dairy farming families over the festive period and would damage confidence in the industry. Union president Meurig Raymond said: “I feel desperate for those 3,000 dairy farmers supplying Arla who’ve been delivered the worst possible Christmas present.
‘Worst possible Christmas present’
“It couldn’t have come at a worse time and this latest reduction will continue to place huge pressure on cash flows for these farmers in the months ahead. It is vital that we don’t see this trend continue through other processors’ February price announcements.”
For the first time producer numbers have dipped under 10,000 with 60 going out of business in November alone, Raymond noted. “We will continue to put pressure on government, retailers and the processors with the aim of trying to rebuild an economically sustainable dairy industry,” he said. “We cannot emphasise enough how awful this downward spiral has been for the dairy industry in the UK.”
NFU dairy board chairman Rob Harrison described the cut as “yet another body blow” for the industry, which will further devastate dairy’s bottom line.
“But despite this news, dairy farmers across the country, including myself, will continue to provide the nation’s milk – working 52 weeks a year, without a break. Even on Christmas day, we’ll be up and in the parlour at 4am before being able to spend some precious time with our children and families.
‘Buy British dairy products over the festive period’
“All we ask is that the public continues to buy British dairy products over the festive period, including British cheese, look out for the Red Tractor logo and continue to back British farming.”
Arla’s UK head of milk and member services Ash Amirahmadi said the price cut reflected falling worldwide demand.
“Global supply and demand are still out of balance which is continuing to create downward pressure,” said Amirahmadi. “The knock on impact of weak international prices on the European markets has affected Arla’s business performance, as well as that of the entire dairy industry in Europe.
“The weak, but positive result of the recent GDT [Global Dairy Trade] auction is welcome, however it is too early to conclude that there is any change in underlying market conditions.”
Meanwhile, last month Arla announced a restructure of its UK operations, which would result in the loss of 100 jobs.