UK milk processors cut prices paid to dairy farmers, deepening squeeze on producers
Two large UK milk processors, Freshways and Arla Foods, have cut the prices they pay farmers. Most producers were already being paid less than it costs to produce milk.
Two major milk processors in the United Kingdom have announced lower prices for the milk they buy from farmers in recent days, adding pressure to a dairy sector where most producers were already paid less than their production costs. The industry has endured a year of volatile farmgate prices, a summer drought, and soaring fuel and fertiliser costs linked to the conflict in Iran.
Freshways cut
Freshways, a large processor supplying bottled milk to corner shops, cafes, hotels and wholesalers, will reduce its price by 7p a litre from 1 December, to 29.4p a litre. That almost cancels out the combined 9p increases the company introduced over the past two months to support farmers after the hot, dry summer. Managing director Bali Nijjar said expected improvements in dairy markets had not materialised and the firm's costs had risen.
Arla Foods decision
Arla Foods, a dairy cooperative and one of the UK's three largest processors alongside Müller and First Milk, cut its standard milk price by 0.45p a litre in November, to 40.41p. The organic price stayed at 58.25p a litre. Arla said global milk supplies were stabilising at a high level.
Farmers' response
Ian Harvey, chair of the National Farmers' Union (NFU) dairy board, said confidence in the sector is "at rock bottom". He said a cut of this size, rather than a phased reduction over two to three months, is hard for farmers to cope with. The NFU called the Freshways move "hugely disappointing".
Dairy market analyst Chris Walkland noted that farmers often cannot switch processors or influence the price they receive. Some supermarkets, including Tesco and Sainsbury's, have committed to paying farmers based on the cost of production, but such arrangements are not open to everyone.
