PBA ReporterDairy giant, Arla Foods, has projected dairy prices may remain high due to a decline in global milk production and soaring costs amid greater resistance to price increases from key supermarket chains
The company reported a 17% rise to €6.3bn against €5.3bn of last year in revenues during the first six months of the year reportedly driven by significant price increases.
Reportedly, some shoppers have recently expressed shock that the price of a 750g tub of Lurpak surpassed £7 in some supermarkets.
Arla, the UK’s largest supplier of fresh milk and cream, had increased the pre-paid milk price to its farmers to cushion them against the diary prices increase they are facing.
However, the Denmark-based dairy said, “this has yet to secure an increase in milk production due to the continued and significant increase in on-farm costs and uncertainty created by the current global market conditions.”
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Also, the company noted that the Ukraine war had pushed up farmers’ costs, since Russia and Ukraine are among the world’s biggest exporters of fertilizer and animal feed, thus the Kremlin’s invasion has disrupted supplies, leading to increased prices.
Even though fuel prices were already rising as demand for energy increased after Covid restrictions were eased, the fifth biggest dairy company in the world added that the war has also pushed them up further because of sanctions and severe disruptions to shipments.
The dairy reveals it is expected that global milk production to decline further and “contribute to sustained high dairy prices”, which was likely to further reduce consumption.
Using the forecast, Arla also anticipates the second half of the year to be “even more challenging” due to “ongoing inflationary pressure, political unrest” and milk decline.
Elsewhere on dairy prices, Arla Foods Bangladesh, a subsidiary of European dairy cooperative Arla Foods, has said it has not faced any safety-related issues for nearly five and a half years, marking a safety milestone since its inception.
Over the years, the producers of Bangladesh’s beloved powder milk brand Dano said it has been practicing a number of stringent methods to ensure the safety standards prevalent at the factory premises.
Notable activities include implementing Arla Global Cornerstone Program “Behavioral Safety program” at the site, consistent training, and evaluation programs for employees, and transparent reporting culture at the site through the Arla Global safety reporting system, among others.
Such initiatives have also enabled Arla Bangladesh to be considered as one of the benchmarks for safety standards within global Arla facilities.
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