ARLA price cut disgusts me
Ongoing competition in the middle ground liquid milk market, exacerbated by retail price cuts is the real reason Arla has reduced the price it pays for liquid milk to its farmer producers from anything between 0.7ppl to a whopping 1.7ppl says the NFU's North West Dairy Board.
Chairman of the board, Mike Taylor, who farms at Russell Farm in Burton, Carnforth, said: "In my opinion Arla's price decrease has a lot more to do with the losses they have been making because of their dealings with Asda rather than the low prices butter fat and cream is currently demanding.
"My board and I deplore this kind of situation. When companies such as Arla find a shortfall in their profits they instantly respond by sending a letter to their producers telling them they are going to cut the price they pay for their milk.
"What they don't seem to understand is that there is a knock on effect right through the dairy industry and because I represent the NFU and all of its members, I feel the need to highlight the damage this company is doing to the entire sector.
"Nobody works in isolation. When someone pulls the price down, the price comes down for everybody else. Make no mistake, this is really bad news for dairy farmers no matter who they supply to."
NFU North West's senior policy adviser for the dairy industry, Adam Briggs, added: "The NFU firmly believes these cuts have as much, if not more to do with addressing a profitability issue flagged up by Arla's recent profits warning which, in itself, has been partly brought about by the severe devaluation of the liquid milk market by Asda's decision at the end of March to reduce retail liquid milk prices.
"We have also attacked Asda for allowing the price paid to its producers to be reduced especially after all its recent promotion of how the 4-pint pledge benefits both farmers and consumers.
"It is not known at this stage how the reverberations of this cut will be felt elsewhere in the industry. The NFU is putting pressure on other processors to resist the temptation to follow Arla's cut downwards and our ongoing conversations with major retailers are heavily focussed on the need to avoid the potential implosion of the dairy sector that may result."
