A senior delegation from the NFU called an urgent meeting with Arla Foods UK CEO Peter Lauritzen this week to discuss the current dairy situation and communicate farmers’ views on the Arla Foods Milk Partnership (AFMP) investment proposals.
Speaking after the meeting, NFU dairy board chairman Mansel Raymond said: "Having met many frustrated and dissatisfied Arla suppliers in recent weeks, I felt it was important to take farmers’ concerns straight to the top of the company.
"I was surprised to hear that Arla thought all its dairy farmers are currently getting a good return, and are apparently being told by the AFMP representatives that dairy farmers are not unhappy with their milk price. This certainly isn’t the message that I’m picking up on the ground, and it concerns me that farmers’ frustrations are not getting through to the company. We left Arla in no uncertainty about farmers’ anger at their milk price, which is an enviable distance away from the 37.9 cents per litre (equivalent to 32.2ppl) that Danish and Swedish farmers are currently receiving from Arla Amba.
"We know that we operate in a different market place, but it’s sickening for farmers to watch commodities outperforming liquid milk prices for over a year. Dairy farmers in the UK have previously been led to believe that commodities are a driving factor for liquid milk prices – as was certainly the case when those commodities dictated a price fall – so farmers are understandably confused and angered to see that commodities are having no beneficial bearing on milk prices now. On top of this, the cost of milk production is rocketing, creating a 3ppl profit gap and widening by the day.
"Arla reports that the market place is tough; that they understand the short term pressures, but are taking a longer term view. There’s no denying that Arla certainly has an ambitious and impressive growth strategy. I have no doubt that the longer term opportunities for Arla suppliers are very positive – investment in Westbury, the expansion of Cravendale, and plans to build a brand new dairy – but it’s disappointing that Arla seems to adopt such a short sighted view on the here and now. Without a milk price that rewards farmers when market returns are strong and one that allows farmers to cover their cost of production and invest for the future then there simply won’t be the supply base that Arla needs to achieve its long term plans.
"We raised the ongoing doubts that dairy farmers have over the investment proposals, but we have been informed that the company has listened and is seeking to address these concerns so we await further details with interest.
"Arla wouldn’t be drawn on what farmers can expect for next year, but told us that while competition in the UK liquid market remains tough, things should get better. The question of course is when? Arla wants farmers to give them their trust. I just hope that farmers’ trust isn’t rewarded with any nasty shocks.
"I will be meeting with the Chief Executive of Arla Amba in Denmark in January to discuss these matters directly with Arla’s owners, and honour the commitment I made to those NFU members supplying Arla to voice their concerns at the highest level."
