Pan-European dairy co-operative Arla Foods has announced plans to increase its on-account price for conventional milk by 1c for March 2020.

When applied to the UK manufacturing price it means an increase of 0.90p/L bringing the price to 30.94p/L.

The Arla on-account price for UK organic milk will decrease by 1c for March 2020, which when applied to the UK manufacturing price will see a decrease of 0.9/L to 39.98p/L.

Stable markets

Arla Foods amba board director, and farmer owner, Arthur Fearnall, said: “Global milk production, having been stable through most of 2019, ended the year with most major exporting areas starting to show growth in production.

"Only in Oceania did volumes decline, due to hot and dry conditions particularly impacting New Zealand. Commodity markets remain strong, though the recent trend of increasing protein prices and reducing fat prices continue, particularly in Europe.

Whilst the market fundamentals appear unchanged, the fear of reduced demand in Asia due to the Coronavirus has had a negative impact on global powder prices. Markets do not like uncertainty.

Graham Wilkinson, UK agriculture director at Arla Foods UK added: “UK organic milk production has remained strong but demand has weakened, resulting in an imbalance in the market.

"Whilst the reduction to our organic price is unwelcome for our organic farmer-owners, as a business it remains a strategic priority for us and is why we remain committed to continuing to fuel the growth of organic products and expanding our organic portfolio to offer consumers greater choice.”

The manufacturing price is based on every other day collection, top quality, one million litres, 4.2% butterfat, 3.4% protein, submission of Arlagarden Plus data and Accessibility incentives.

Arla farmers are paid on constituents via a manufacturing schedule. For ease of comparison, the liquid price for conventional is 29.75p/L and 38.44p/L for Organic based on 4% fat and 3.3% protein.