Arla has announced it will be dropping its UK milk price by 2.16ppl – and since December, Arla farmers have seen a total drop of 5.19ppl.
The National Farmers' Union (NFU) has urged Arla to "speed up its commitments" to looking at risk management options for its suppliers.
The NFU is also calling on Arla to be clear as to why its current plans are not preventing steep price drops.
Arla Foods amba board director Johnnie Russell explained: “While this will be unwelcome news for our farmer owners, the challenge that we face is that our price, in common with those of our competitors, has been affected by the recent dramatic falls in the commodity markets from the highs of last autumn.
“While last year’s increases were driven by fat, the long-term decline in the value of protein since the start of 2017 has had a significant impact.”
NFU dairy board chairman Michael Oakes says he is "disappointed and surprised" to see this level of price drop again, despite a stable demand for butter and the UK Futures Market Equivalent showing a positive result on the forward curve.
“We will soon see Arla’s seasonality pricing mechanism lower the pence per litre received even more,” Mr Oakes explained.
“Just this week at the NFU Conference Arla announced a growth in revenue of £1.94bn. Arla farmers don’t appear to be feeling the positive effects of this revenue or the strategy to manage risk in the market.
“We want to see more done at both ends of the chain to insulate farmers from such steep price drops.”
The NFU has said Arla must work with farmers to provide them with the ability to mitigate the effects of volatility on their businesses.
Mr Oakes added: “We are holding Arla UK’s managing director Tomas Pietrangeli to his commitment made at NFU Conference to look into risk management options for Arla suppliers. We are calling on Arla to speed up this work so farmers can see the results.”
The NFU Dairy Board is due to meet with Arla later in the year and will be reinforcing this call.
