Arla Foods has announced it will cut its milk price to farmers by 1.63p/L from December.

Only last month Arla, when maintaining its milk price during November, said it was drawing a line in the sand and creating much needed stability for its owners.

However today Arla UK’s head of milk and member services Ash Amirahmadi said markets continue to be challenging, due to the prolonged impact of the significant global supply and demand imbalance, as witnessed by further reductions in the GDT auction.

”This imbalance is having a material impact in all European markets, with a consequential impact on earnings across the entire dairy industry.

“Arla has taken mitigating actions to reduce the impact on our owner milk price but, ultimately, it is not possible for Arla to negate the impact of global markets.”

The cut comes in the wake of a dire warning from the European Milk Board (EMB) over the downward direction of milk prices across Europe.

Milk prices are in free fall across Europe, according to the EMB, which is predicting further price collapse when quotas end next year.

It is also calling for a ‘quota-type’ programme for times of crisis, which is says the dairy industry is currently facing.

Also, in recent days, ICMSA President John Comer told the National Dairy Conference an almighty crash in the dairy sector is imminent in the first few months of next year.

He also said that, while he shares the ‘noble’ aspirations the Minister for Agriculture, Simon Coveney, has for output from the dairy sector under Food Harvest 2020, a maximum number of farm families must be kept in dairying.