Arla Foods is raising its milk price to owners by two eurocents per kilogramme from 1 July. When the increase in the on-account price is applied to the UK standard manufacturing litre, the increase equates to an upward movement of 1.65 pence.
July also sees a new quarter’s (April to June) average exchange rate introduced to the pricing mechanism, however this money was used to support the milk price in May and June. In addition, the rebalancing of the UKAF cash flow will conclude this month with a further small deduction.
The net impact of the milk price increase and the currency and cash flow adjustments is a 1.44 pence per litre increase in the manufacturing standard litre, taking it to 29.17 pence.
Commenting on the decision to increase the price, Arla Foods amba board director, Jonathan Ovens, said: “This will be welcome news for our owners that we are reflecting current market returns from rising fat prices in our July milk price.
“The current market situation is characterised by strong demand and low stocks of fat, which is driving up prices for butter, cheese and other products containing fat. The market for protein is also firming, however at a low level.”
NFU dairy board chairman Michael Oakes said: “This is a positive announcement from Arla and clearly a move in the right direction. Even though some may claim that improvements have been slow in coming through, Arla do have an agreed milk pricing policy in place which they share with their supplying members. They also provide regular updates on company strategy and markets through briefings and meetings. Those farmers supplying Arla need to take every opportunity to get involved in these meetings and engage more with their farmer representatives.