Arla Price Drops

The UK’s largest dairy company, Arla, is reducing the price it pays its members from the 6^th July.  The standard litre price will fall by 1.18ppl to 23.81p for its circa 3,000 co-op members.  The price cut is made up of two parts.  A one eurocent per kg (0.77 pence when applied to the UK standard litre) reduction that applies to all Arla Foods amba members across Europe.  In addition, for the UK, the continued strength of Sterling means that there is a further 0.41ppl cut.  The July price see a new quarter’s (April-June) average exchange rate being used.  Arla Direct suppliers who are not members of the co-op will face a 1ppl price cut from the 1^st August. 

A price below 24ppl for the summer months is obviously bad news for Arla suppliers.  The continuing weakness of global commodity markets, as evidenced by the results of the GDT auction over the past couple of months, has seemingly forced the co-op’s hand.  Arla is now held as a market leader in the UK dairy industry.  Although both Muller-Wiseman and Dairy Crest have pledged to hold their prices until August, it would be no surprise if they followed Arla in implementing a price cut at that point.