Falling milk prices piles pressure on Arla farmers as revenues drop

Kasmira Jefford
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Arla has been hit by the supermarket price wars and a fall in demand in China and Russia
ARLA Foods has blamed the global decline in milk prices and volatile market conditions for a drop in revenues in the first half of the year.

The Danish-based dairy giant behind brands including Lurpak, Castello and Arla, said total revenue dropped 3.8 per cent to €5.13bn (£3.73bn) in the first half from €5.33bn compared with the same six months in 2014, on profits of €116m.

Dairy producers have come under heavy pressure due to a glut in domestic milk supply combined with falling demand from China and Russia’s ban on EU dairy products.

UK supermarket price wars, where basics such as milk and butter have been cut, has sparked protests among farmers, with Asda and Morrisons agreeing in recent weeks to pay a minimum price for their milk.

Arla, which has around 3,000 farmers in the UK who produce brands including Anchor butter and Cravendale milk, said it is keeping a “tight grip on costs” and has already reduced investments by 30 per cent.

Revenues across its three main brands Arla, Lurpak and Castello grew by 2.4 per cent as it worked to redirect its surplus milk volumes into branded products.

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