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‘We’re calling an end to cheap milk,’ says Arla boss as farmers’ costs soar

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UK milk is much cheaper than on the continent (Dean Sanderson/Arla Foods/PA) (PA Media)

The UK boss of dairy giant Arla has said customers are likely to face higher prices to buy a pint of milk as farmers come under pressure from sky-high costs.

“We are reaching the end of cheap milk,” Ash Amirahmadi told the PA news agency as the company laid out its plan for the next five years.

Farmers have faced squeezed milk prices for years. In the last 10 years, consumer prices have risen 26% overall, Amirahmadi said, but the price of milk has dropped 7% in the same period.

“This strategy is about improving the profitability of fresh milk,” he said.

“We saw inflation on farms, on feed, fertilizer and fuel, starting in June or July of last year.

“There were already some pressures building up, but since the Ukraine crisis that has increased exponentially, particularly on things like fertilisers.”

It could take some time for the costs to be passed on to buyers, he said, but in the next five years things are likely to change.

“If you look at what we are paying our farmers today, we are paying 30% more than a year ago. They need it”.

Milk production continues to fall, he said.

Arla’s five-year strategy could see it become the first dairy to export milk on a large scale outside the UK to take advantage of higher milk prices abroad.

The company said there are signs that demand for dairy products around the world will increase by two percent each year for the next half decade.

He warned that there are “clear signs” that dairy farmers may not be able to meet that increase.

Recent fairer deals between supermarkets and dairies have not been enough to offset recent huge price increases. Like many parts of the economy, agriculture faces runaway costs.

Fuel prices have risen significantly and fertilizer costs are also through the roof, Amirahmadi said.

The UK’s largest supplier of fresh milk, Arla products can be seen on supermarket shelves across the country. They include Cravendale, Lactofree, Lurpak, and Anchor.

The cooperative’s 2,100 British farms also supply some of the own-brand milk sold by supermarkets.

Farmers also face additional costs to invest in new forms of production that can help combat catastrophic changes in climate.

Mr. Amirahmadi said that farmers in Arla are experimenting with innovative new technologies, such as different foods that could reduce emissions.

Cows are major emitters of methane, a potent greenhouse gas that has a much bigger impact than carbon dioxide.

By changing the cows’ feed, you can reduce the amount of methane they burp or fart.

The company is also trying to increase biodiversity on its farms and is reviewing different packaging options. By 2030, all packaging will be made from recycled materials.

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