UK – Dairy farmers are set to earn less from their produce following the decision by Arla Foods UK and Muller Milk to slash their farmgate milk prices.

The decision is in response to a fall in prices of key dairy commodities such as whey, cheddar and butter.

These products have been trading down for the past month taking down with them the overall market value of milk by 3.6 ppl (pence per litre) from the end of last year.

Arla Foods, one of the largest players in the UK dairy industry, announced that the on-account price for its conventional and organic milk will decrease by 2.65ppl ultimately.

This is expected to result in the company’s UK manufacturing price for conventional milk to drop to 46.47 ppl and that of organic milk to 53.35ppl.

Muller Milk and Ingredients, the largest supplier and distributor of milk UK and Ireland, looks to cut its milk price to 44ppl effective March 1, 2023.

The Agriculture and Horticulture Development Board (AHDB) which provides market information to improve supply chain transparency in Britain’s livestock and dairy sectors, projects a substantially downward trajectory on farmgate milk prices in the third quarter of the 2023 financial year.

The body predicts that a 1ppl change in the market value of milk would lead to half a pence per litre difference in the average price of milk.

According to their market analysis reports, these are the first reductions in almost two years.

These changes are attributed to low consumer demand and rising milk volumes according to processors Arla and Muller.

Paul Savage, the agriculture director for Arla UK said, “The uncertain economic outlook means we are currently facing a declining commodity market.

We know that our farmer owners are still facing significant input costs for labour and energy and we remain committed to continuously looking for ways to deliver the most value to our farmer milk.”

First Milk, another British dairy cooperative also very recently announced a substantial 4 pence per litre milk price fall effective March 2023.

The cooperative said that this was the biggest disjoint between market prices and current farmgate milk prices they have ever experienced.

“This has accelerated significantly since the beginning of January, and we are now seeing week-on-week reductions in dairy market prices,” said Robert Craig, First Milk’s vice chairman.

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