Arla offers first sign of better milk prices

From March 30, the processor will pay its UK members an extra 0.83 pence per litre (ppl), taking its standard litre price to 25.8ppl.

The National Farmers’ Union (NFU) hailed the concession as “the first positive move by a major UK milk buyer in many months”.

The UK price takes into account a new January-to-March average exchange rate in the pricing mechanism.

Ash Amirahmadi, head of UK milk and member services at Arla, said: “The markets have shown an upward trend recently, in particular due to a reduction in milk production in parts of Europe and New Zealand.

“GDT (Global Dairy Trade) auction prices reduced in the last auction and, consequently, there is uncertainty as to whether the positive trend in 2015 is sustainable. The impact of the abolition of quotas post April will be a key factor in this.”

Rob Harrison, national dairy board chairman for the NFU, said: “At last we have seen a UK milk price follow the upward motions of market indicators over recent weeks.

“Farmers have been seeing rising wholesale prices almost across the board with no sign yet of this feeding back to milk cheques, but we must see income returning to the farm gate quickly in order to save the industry from further devastation.

“It is now more important than ever that trust is re-built in the dairy industry between processors, farmers and retailers. This needs to happen through transparent pricing mechanisms, quick returns to farmers’ incomes in line with the market and a fair balance of risk across the supply chain.

“Today’s news should serve as a wake-up call to other processors. They cannot hold on to increasing returns at a time when farmers are suffering monumental losses of income, we must see returns to the farm gate immediately.”

Arla is supplied with milk from more than 250 dairy farmers in Yorkshire.

The average UK farmgate milk price in January was 26.30ppl, compared to 33.87ppl at the same time a year earlier.