February 4, 2015

Arla accused of paying low prices to UK's milk farmers

Arla Foods was blamed for making low payments to milk farmers in the UK, during a parliamentary hearing in Scotland. The session concerned about the dairy industry crisis in the region, which saw Britain's milk prices bottoming to their lowest since 2007.

In addition, farmers claimed that they were paid lesser than production cost; some were, in fact, reported to have receive as little as US$0.29/liter due to the effects of Russian sanctions on EU milk, which pushed down prices.

In their testimonies, supermarkets Morrisons and Asda faulted Arla for deciding to pay farmers US$0.38/liter of milk. 

"We negotiate a price with those companies for pasteurised, standardised bottled milk delivered to our depots around the country and it's up to them to set the farm gate price that the farmer receives", argued Andrew Loftus, the agriculture manager of Morrisons.

He also stated that the supermarket is not profiteering from lower-priced milk, instead, earning lower than it would have.

Morrisons was compelled to slash milk prices with the price tussle over everyday foods between major grocers, added Ewan MacDonald-Russell, another Morrisons executive. The decision, however, was committed at the expense of the supermarket's profit margin, with apparently "no impact on farm gate prices".

Beside Asda and Morrisons, Tesco, Sainsbury's, Marks & Spencer and Lidl were also called up to testify.