Arla Foods to reduce milk price by two pence per litre

Arla Foods has agreed with the Arla Foods Milk Partnership board that it is to reduce its standard litre price by two pence, with effect from 5 January 2009, taking Arla’s standard litre* to 25 pence.

During 2007 and 2008, the buoyancy of the commodity markets helped Arla to increase its standard litre price by a total of 8.6 pence.

However, as 2008 has progressed the underlying trend within the commodity markets has been one of constant decline. The consequence to Arla of the downturn of these markets is now so significant that, unfortunately, with the commodity income no longer available, Arla is not able to continue to financially support the AFMP milk price, having done so throughout the second half of the year.

Commenting on the decision, Hanne Søndergaard, deputy CEO of Arla Foods UK plc, with responsibility for milk procurement said: “We regret having to reduce our milk price to Partnership members. 2009 is, undoubtedly, going to be a tough year for many industries including dairy and I would like to reassure our members that both Arla and AFMP will continue to work for the best interests of members.”

AFMP Chairman, Jonathan Ovens, added: “While it is extremely disappointing that we are starting the new year with a price drop, Arla has presented a sound business case for a reduction, based on falling commodity returns, which the board has recognised.”

Ends

* Arla’s standard litre is based on supplying 1 million litres at 4% butterfat, 3.25% protein and top bands of hygiene

Arla Foods UK plc is home to some of the UK’s leading dairy brands including Cravendale, Lurpak and Anchor. Processing approximately two billion litres of milk a year Arla continues to be one of the UK’s leading dairy companies and a supplier of fresh liquid milk and cream to the top seven retailers.

Over 2,500 daily deliveries are made directly to stores nationwide and Arla brands can be found across the dairy category. As well as the leader of the butter, spreads and margarine sector, and a major supplier of other added value products including flavoured milk and cheese, Arla continues to build working relationships with Arla Foods Milk Partnership, a unique group of dairy farmers, which supplies around 90 per cent of Arla's total milk requirements.

Behind this leading business is a team of circa 2,800 people across the UK located at our dairies, distribution centres and head office.