Arla Foods is to cut its UK July milk price by 1c/kg; this is the equivalent of 0.77p when applied to the UK standard litre, the co-op says.

This comes after the co-op decreased its June milk price by 1c/kg and the price drop will come into effect from July 6, 2015.

Arla says that Sterling has continued to strengthen and July sees a new quarter’s (April to June) average exchange rate being introduced to the pricing mechanism.

The introduction of this quarter’s exchange rate into the mechanism has a 0.41p negative impact on the milk price, it says.

The combined impact of the currency smoothing mechanism and the reduction to the on-account price lowers the UK standard litre by 1.18p, taking it to 23.81p, it says.

The Arla direct milk price will reduce by 1ppl from August 1, 2015.

Ash Amirahmadi, Head of UK Milk and Member Services, said that commodity markets are continuing their downward trend, despite only a minor reduction in prices in the latest GDT auction.

“While we have taken significant mitigating actions, the impact has been felt on our traded business and more recently on European markets which are also in decline.

“Unfortunately, these factors are affecting the entire dairy industry and despite our efforts it has not possible to buck the trend.

“I can confirm that our customers in the UK are supporting us at this very difficult time for our members,” he said.