The European dairy cooperative said it will increase the farmgate milk price it pays by 2 cents per kilogram for conventional milk and 1 cent per kg for organic milk. This lifts Arla’s farmgate milk price for the standard manufacturing litre by 1.66 pence per litre (ppl) to 49.45 ppl for conventional and 0.74 ppl for organic, taking the organic milk price to 55.11 ppl.
The quarterly currency exchange rate adjustment will negatively impact the on-account price by 0.12 ppkg, the company noted.
“Over the last few months, we, as farmer owners, have been pleased to see a significant increase in our farmgate milk price for both conventional and organic milk. This is much-needed as our on-farm costs have seen drastic inflation in recent months,” Arla Foods amba board director, and farmer owner, Arthur Fearnall, said.
Looking to the future, Fearnall said he expects this situation to stabilise – albeit at an elevated level. “Commodity prices, which have been climbing, have now begun to stabilise although remaining at a high-level and we continue to see a decline in the overall milk supply across the EU. Nonetheless, the outlook for the future is stable,” the dairy farmer predicted.
With the cost of living squeeze and rising food prices impacting UK consumers, Arla UK’s Agriculture Director Paul Savage explained that the organic milk price increase trails that of conventional milk because demand has been depressed. “In the UK, we continue to face a period of significant inflation which, in particular, is adding pressure to the UK Organic market overall,” he observed. “It is against this backdrop that we are pleased to have been able to secure this latest increase in the overall price for our organic milk.”