Arla cuts milk price by €1.5/kg and blames Russia

Arla is reducing its owner on-account price by €1.5 cents per kg, with effect from September 1.

When applied through the pricing mechanism, this equates to an overall 1.2p/L reduction in Arla’s UK standard litre price, taking it to 30.38p/L.

Commenting on the reduction, Ash Amirahmadi, Arla UK’s head of milk and member services said: “Global commodity markets have fallen sharply over recent months – a development that has affected dairy companies, including Arla. In addition, Russia has announced a ban on agricultural import from certain states, including the EU. The ban has affected Arla Foods’ exports and we are now unable to export products to Russia.

“This further reduction in Arla’s global milk price is necessary due to a continued downward movement in global and European prices, made worse by the Russian import ban.”

Russia eases ban

The dairy ban imposed by the Russian government on August 7 has been eased slightly, with lactose-free milk now allowed to enter Russia.

According to DairyCo while it is difficult to determine how many countries and dairy companies will benefit, the announcement is already reported to be good news for some European exporters.

It says that Finland, while not a major milk producing EU country, relies heavily on exports to Russia. One of its cooperatives, Valio, accounts for 85% of Finland’s dairy exports to Russia and is reported to have run down operations on the back of the ban. Lactose-free products are said to make up 10% of Valio’s total exports to Russia and therefore this latest change will alleviate some of the pressure on the company.

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