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