Arla’s recent 0.4ppl reduction is a surprising move when the Arla Amba price remains unchanged. NFU dairy board chairman Michael Oakes said: “Last month I applauded the UK Arla Farmers board in supporting UK members by removing the impact of the EU milk price reduction of one eurocent per kilogram. Little did I know at the time that they would seek to rebalance the UK purse so soon.
“At the Dairy Industry Newsletter conference last week I heard that EU butter markets are exceptionally good with futures prices up to €5,400 and €5,500 for June and July. At the current exchange rate that’s around £4,720 so I can clearly see why farmers are asking what’s going on. Latest figures from AHDB show that while both Actual Milk Price Equivalent and Milk for Cheese Value Equivalent indicators have weakened slightly, the cream income to the processor continues to rise and is now delivering on average 10.1ppl back to the processor.
"A question I want answered is who benefits from this high cream and butter price - as it clearly isn’t dairy farmers? With spells of dry weather impacting grass growth - and ultimately volumes - and the GDT market continuing to strengthen, it makes no sense that are we are now seeing milk price reductions. Last month it was Dairy Crest announcing a 1ppl cut for June and a further 1ppl cut for July, with County Milk Products even backdating milk price cuts.
“While Arla mentions that markets are stabilising and we’re seeing more and more positive signs at the trading end – I would hope that this would be reflected in the farmgate price.
“The need for a more transparent market could not be more obvious than now. With such an encouraging lift in prices at the trading end, there is a clear expectation for this to be translated through the supply chain. If we were to have a more transparent market this would build trust throughout the supply chain. This makes it even more relevant that we continue our call for better market transparency through mandatory dairy price and volume reporting – something that we are lobbying government for as we leave the EU.”