Arla, the UK’s biggest dairy cooperative, has announced a price cut for its members.

The Denmark-based Co-op’s decision follows cuts announced by First Milk, made on Wednesday at the same time as outgoing chair Sir Jim Paice tendered his resignation.  

Arla’s UK members will see their farm-gate prices cut by 1.18ppl from 6th July, taking prices to 23.81ppl.

According to the NFU, 450 dairy farmers have left the industry since summer 2014 in England and Wales alone. On Monday, the union described the announcement from Arla as a “Devastating blow.”

NFU dairy board chair Rob Harrison said, “This is yet another body blow to dairy farmers whose businesses have been in utter turmoil for the past 12 months.”

Ash Amirahmadi, head of UK milk and member services at Arla, commented, “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.”

However, NFU’s Rob Harrison said, “We need Government to move away from paying lip service and focus on the here and now. Their long-term solutions must take a back seat while we focus on the immediate crisis; we need them to insist on best practice in the supply chain, look at growing dairy consumption and supporting more investment in dairy processing in the UK – and this needs to happen now.”

“We also urgently need milk-buyers to be more transparent in pricing. Although there are a few clear formulas employed by milk processors, these are few and far between. We need all processors to improve transparency in pricing and must stop idly following one another to the bottom; this is a dire situation and we need to see the dairy industry pull through this period of volatility.”

From next Monday (6th July), Arla said that its on-account price will be reduced by one eurocent per kg (0.77 pence when applied to the UK standard litre). However, when combined with the impact of Arla’s currency smoothing mechanism, this will amount to a cut of 1.18ppl for UK members.

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