January 6, 2009

UK dairy firms cutting milk prices on declining market

UK's Arla Foods and First Milk have both announced cuts to their January milk prices, citing falling dairy commodity markets.


Arla has cut its milk price by 2p/litre to 25p/litre from Monday (Jan 5) onward, while First Milk cut 1.25p/litre with effect from January 1.


Conditions in the global dairy markets, which drove up UK milk prices in 2007 and 2008 have deteriorated sharply, and the fall of European milk prices has impacted the UK, said First Milk chief executive Peter Humphreys.


However, the long term fundamentals for the dairy sector remain strong, said Dairy UK.


Dairy demand growth is still outstripping production growth in the developing world, while European consumers have retained their appetite for dairy products, said director general Jim Begg, adding that cost relief from lower oil prices should also start to feed through this year.


Leeds-based Arla Foods UK Ltd. is a major British dairy products company owned by the Swedish/Danish Arla Foods.


First Milk is the largest dairy farmer co-operative in the UK, handling 1.8 billion litres of milk per year.