Arla's milk price for January 2021 will fall to 29.58 pence per litre as the markets experience 'continuing uncertainty' due to Covid-19 and Brexit.
Arla Foods' on-account prices for conventional and organic milk will decrease by 1.2 euro cents per kilo - equivalent to 1.08 pence per litre - from 1 January.
This takes the co-operative's conventional milk price to 29.58 pence and organic milk to 37.94 per litre for farmers.
The quarterly currency smoothing mechanism, which this month is 0.05 pence per kilo, is offset by a cashflow balancing adjustment.
Arla Foods amba board director Arthur Fearnall, expalined that global commodity prices had remained relatively stable.
But he said European prices, particularly for fat, yellow cheese and mozzarella, had weakened of late in response to growing milk volumes, Covid-19 impacts and Brexit.
"These market uncertainties are impacting the overall market for organic milk as well," Mr Fearnall added.
"As we go in to 2021, subject to the outcome of the Brexit negotiations, the current outlook is stable.”
Alice Swift, UK agriculture director at Arla, said that despite a disruptive period, the co-op had managed to maintain a relatively stable conventional milk price over the last couple of years.
"Throughout the exceptionally disruptive and challenging year we have faced in 2020, our teams across the UK have continued to worked tirelessly to ensure we successfully played our part in feeding the nation and minimised any potential disruption for our customers.
"This continues as our nutritious dairy products make their way to millions of households across the UK as they prepare for Christmas,” she said.
Arla farmers are paid on constituents via a manufacturing schedule. For ease of comparison, the liquid price is 28.50 pence per litre based on 4% fat and 3.3% protein.
Manufacturing price based on every other day collection, top quality, one million litres,4.2% butterfat, 3.4% protein.