The company said the move was in reaction to falling sales of organic milk over the past three months, and would take the AFMP price for a standard organic litre to 33.5p – a premium of 8.5p a litre above Arla’s standard, conventional milk price.
A letter to AFMP members on 16 March said the fall in organic milk sales was a result of consumers trading down during the recession. “Unfortunately, this has meant that organic supply is outstripping demand, putting Arla in the position where it is having to put the surplus into the same markets as conventional milk, where there is also excess,” it said.
“It is, undoubtedly, going to be a tough year in 2009 for many industries, including dairy. We will continue to monitor organic retail milk sales, but believe that there is a sustainable future for organic producers.”
Source: Farmers Weekly Interactive
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