Arla raises farmgate milk price after warning higher food prices still to come

By Katy Askew

- Last updated on GMT

Arla raises farmer payments as on-farm costs surge / Pic: GettyImages-phi2
Arla raises farmer payments as on-farm costs surge / Pic: GettyImages-phi2

Related tags Arla Farmgate milk price Food prices

Arla UK has raised its farmgate milk price following a warning that food inflation is set to continue in the country.

From 1 June 2022, there will be an increase of €0.5 per kg to the Arla on-account price for both conventional and organic milk. This will increase Arla’s farmgate milk price for the standard manufacturing litre by 4.49 pence per litre to 47.79 ppl for conventional and 54.34 ppl for organic milk.

Commenting on the move, Arla Foods amba board director and farmer owner Arthur Fearnall pointed to the rising cost of living and higher on-farm costs. “In parallel with the rising costs of living in the UK, on farm running costs continue to increase dramatically. I’m sure many of my fellow farmer owners will be grateful for this significant increase in our farmgate milk price which, will allow many farmers to make some longer term operating and supply-chain decisions,”​ he said.

The move was possible because Arla sees signs of stabilising EU dairy commodities, the dairy farmer continued. “EU dairy commodity prices for Yellow cheese and butter have begun to stabilise but remain at a high-level. The outlook is stabilising.”

Paul Savage, Agriculture Director for Arla UK, added that the price rise was needed to ensure security of the UK milk supply. “With UK inflation at a 40-year high, our farmer owners continue to face rapidly increasing costs for feed, fertiliser and fuel. This substantial increase in our farmgate milk price is a necessary measure to help our farmer owners cover costs so the UK’s milk supply can continue to flow, while also prioritising sustainability and animal welfare on farm,”​ he said.

Impact on food prices

The news follows warnings from Arla UK that consumers in the country can expect food inflation to continue apace.

Arla Foods' chief commercial officer Peter Giortz-Carlson told Sky News that input costs, driven higher by the war in Ukraine, will have to be passed on to customers. He cited a jump in packaging and feed costs of as much as 40%.

The comments came as the Consumer Price Index inflation rate hit 9% and forecasters warned of a further squeeze on living standards still to come.

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