Arla farmgate prices feeling pressure

Published 23 March 16

Arla’s farmgate milk price is feeling the effect of the ongoing imbalance between supply and demand. The Arla Foods amba on-account price will reduce by 0.94ppl for its UK members from 1 April 2016. This is due to a 0.75ppl (one eurocent per kg) price reduction, combined with a 0.19ppl decrease due to currency movements.

The recent weakening of Sterling would normally be expected to give a positive exchange rate adjustment for farmers in the UK. However, Arla’s pricing mechanism averages currency movements over two years to help smooth out any big ups or downs in exchange rates. At the moment this is meaning a negative adjustment to UK farm prices, but Arla farmers will benefit from the positive currency swing in the future.