NFU Scotland has described Arla's latest price cut as a knee-jerk reaction
to the company's poor financial results and symptomatic of a strategy to
drive producers out of the industry. The Union has urged the rest of the
sector to isolate the company and not react to its attempt to drive down
the UK milk price.
NFUS has accused Arla of attempting to 'spin' its way out of trouble by
hiding an average cut of between 0.6-0.7 pence per litre in complicated calculations
related to butterfat content and individual production profiles.
The Union is today writing to the Chief Executive of Arla's Danish parent
company, Arla-Amba, requesting a meeting in Scotland to explain the Arla
strategy for the UK dairy industry. This follows completely unsuccessful
attempts to have the same discussions with its UK representatives.
The Union has also challenged the supermarket Asda, which sources milk through
Arla, to explain how this downward pressure fits with its promise to treat
dairy producers fairly.
NFUS Vice President Jim McLaren said:
"Frankly, the claims by Arla that this move has nothing to do with
its disastrous financial results are an insult to dairy farmers. If other
processors can post multi-million pound profits from liquid milk, then there
are serious question over Arla's efficiency. It is passing on the penalty
for its financial mismanagement to farmers. And for hard-pressed producers
already considering their future options, this could drive them out of the
"Other processors must not take Arla's bait and drop price themselves.
Retail prices are firm and there is no justification for further drops, other
than to bolster their own margins. Worse still, the supermarkets could come
in and pocket the extra margin themselves.
"This is not about an industry supply problem, it is about an Arla
management problem. The company has been signing up more and more direct
suppliers despite demonstrating that it can't manage that supply."
Chairman of the NFUS Milk Committee Willie Lamont said:
"Arla has also blown Asda's promises to the dairy industry out of the
water. The supermarket has been triumphant in its claims of massive price
cuts for shoppers, whilst apparently protecting farmers. Yet, its retail
cut has not only demonstrated the huge margins been made by supermarkets,
but has shown Asda's apparent willingness to watch farmers get financially
"We have had hollow words from Arla's UK representatives and we have
had enough. We are now asking for a meeting with the Chief Executive of its
parent company in Denmark. We believe, from the evidence, that Arla UK's
strategy is to drive dairy farmers here out of business so it can import
more cheaply from elsewhere. If we are wrong, then Arla-Amba's CEO can come
and tell us why his company is not the destructive influence we believe it
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