As farmers absorb more and more production costs, customers are likely to face higher milk prices when buying a pint. This has been echoed by diary giant Arla. As the business sets out its plan for the next five years, company boss Ash Amirahmadi says, “We are calling time on cheap milk. If you look at what we’re paying our farmers today, we’re paying over 30% more than we were a year ago. They need it.”
Amirahmadi commented that farmers have been facing squeezed milk prices for years – in the last 10 years consumer prices have gone up 26%, but the price of milk has dropped by 7% in the same period. So, Arla’s strategy is about improving the profitability of fresh milk.
He also pointed out that milk production has continued to drop.
Arla’s upcoming strategy could see it become the first dairy to export milk out of the UK to tap into higher milk prices abroad. The company said there are signs that demand for dairy around the world will increase by 2% every year over the next half decade, but warned there are “clear signals” that milk producers might not be able to meet that rise.
Similar to many parts of the economy, agriculture is facing runaway costs. Unfortunately, recent deals between supermarkets and dairies have not been enough to offset large price increases.
To minimise extra investment costs to needed offset climate change, the business is attempting to enhance biodiversity on its farms by looking at alternative options for packaging. Arla hopes that by 2030, all packaging will be made from recycled materials.