Arla UK raises farmgate price to cushion farmers from prevailing inflation

UK – Arla UK, the largest dairy manufacturer in the UK, has announced a raise in its farmgate milk price to alleviate farmers’ losses during this all-time high inflation period in the country.

The farmgate prices are set to increase by €0.5 (US$0.54) per kg from 1 June 2022 to the Arla on-account price for both conventional and organic milk.

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The increase consequently results in an increase in Arla’s farmgate milk price for the standard manufacturing liter by 4.49 pence per liter(ppl) to 47.79 ppl for conventional and 54.34 ppl for organic milk.

The company said the increase is a result of the rising cost of living and higher on-farm costs which have been on the rise for the past few months.

It hopes the raise in the farmgate price will allow many farmers to make some longer-term operating and supply-chain decisions to enable a smooth supply of milk as well as ensure the security of the UK milk supply.

The move was possible because Arla sees signs of stabilizing EU dairy commodities just like prices for Yellow cheese and butter that have begun to stabilize but remain at a high level.

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Paul Savage, Agriculture Director for Arla UK, acknowledged that the raise is a necessary measure to help farmer-owners cover costs so the UK’s milk supply can continue to flow, while also prioritizing sustainability and animal welfare on-farm.

The announcement follows warnings from Arla UK that consumers in the country can expect food inflation to continue apace due to the inflation being at a 40-year high.

The UK’s largest dairy said that input costs, driven higher by the war in Ukraine, will have to be passed on to customers, which will further push the prices up.

Arla UK joins Norco which has increased its farmgate price by an average of 12 cents a liter from July 1 just after its ice-cream factory, head office and rural store in South Lismore sustained damage during the February 28 flood event.

Also, the world’s largest dairy company, Lactalis announced an opening price in the range of US$8.65kgMS – US$8.80kgMS for 2022/2023 with the range reflecting geographical and seasonal variation.

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Suppliers in Northern Victoria will receive US$8.80kgMS, while suppliers in Western Victoria and Gippsland will get US$8.65kgMS, except at the peak of the season when they receive US$8.50kgMS while Tasmanian suppliers will be paid US$8.65kgMS.

This means Lactalis is offering an approximately nine cents rise a liter from the previous farmgate price.

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