Dairy giant expecting milk prices to rise
Dairy giant Arla expects milk prices to rise towards the end of the year as it grows the volume it buys and production levels around Europe decline.
The farmer-owned dairy cooperative, which has a cheese packing facility in Oswestry, saw its revenues fall by 5.3 per cent to 4.85 billion euros (£4.14 billion) in the first half of the year, after s it suffered from the collapse in milk prices.
While its revenues may have fallen and its volumes increased, the Danish company said it had channelled its milk supplies into the highest-value areas, and that helped profits to rise by 1.6 per cent to 124 million euros (£105.9 million).
The company is now increasing the volume of milk it is buying from its members, and said that all indications point to a recovery in the milk price in the second half of the year.
Chairman Ake Hantoft said: "It has been a turbulent past year due to milk production significantly increasing in Europe following the abolition of EU milk quotas in April 2015, which has driven prices down," said chairman Ake Hantoft.
He added that since May milk volumes have fallen, and that is leading prices to recover, saying: "Commodity markets are finally beginning to stabilise and spot milk prices are increasing in major European markets.
"This positive trend is expected to shift the market into a recovery phase that will extend to retail and, subsequently, positively affect Arla's milk price."
The positive effect has already begun to take shape.
Arla have announced a 1p per litre improvement in its milk price for September earlier this week, taking it to 20.05p.
The group also expects its own profits to benefit from 500 redundancies made in the first half of the year.
Mr Hantoft said: "The severe downturn in the market over the last two and a half years has been an eye opener.
"To me, the difficult market situation makes the strength of being an international dairy cooperative even more obvious.
"We do not have to stake all our milk in one single market or a narrow product portfolio.
"In a difficult market, we have paid a milk price above our peers.
"I am confident that our strategy will continue to deliver positive results for Arla's owners in the years to come."
