The price of milk will increase later this year, dairy giant warns

Uncertainty in the market is to blame

Arla said it witnessed overall volume growth of 11% across its brand portfolio (PA Archive)

Dairy giant Arla has warned that the price of milk will rise later this year.

The warning to UK shoppers comes as the Cravendale maker said “uncertainty” across the market has resulted in lower availability of milk globally.

The co-operative, which supports thousands of farmers across the UK, said it expects current volatile market conditions to continue into the second half of its financial year.

However, it said consumer spending was strong in the face of pressure on budgets in 2024 so far.

“The positive trend on consumer purchasing power from the first half of 2024 should prolong into the second half, especially in Europe as inflationary pressure continues to subside and wages increase,” the company said on Wednesday.

“This is anticipated to translate into a continued upturn in demand for dairy, although it is uncertain how consumers will react to the expected higher retail price levels following the commodity price increases.”

Arla makes Cravendale milk (Alamy/PA)

The warning came as Arla hailed “robust” trading over the first half of 2024, boosted by its brands, including Lurpak and Arla Protein.

Arla said it witnessed overall volume growth of 11% across its brand portfolio, with branded revenues up 5.4% as higher volumes were partly offset by a slowdown in dairy pricing.

Lurpak sales were particularly strong over the past half-year, the food and drink firm said.

Bas Padberg, managing director of Arla Foods UK, said: “Following the high levels of inflation that we saw back in 2023, Arla has continuously reinvested back into our brands, to deliver value for our shoppers and ensure the necessary growth needed to return the highest possible milk price to our farmer owners.

“This combined with increased consumer buying power in the first half of the year has led to a strong performance across our branded range.

“Whilst we expect consumer confidence to remain into the second half of the year, trading conditions will be more challenging than we have seen in recent months as commodity markets rise again and we balance reduced global supply with the increasing demand for dairy.”

Earlier this month farmers were warned of a greater risk of the animal disease bluetongue following a “rapid increase” in cases in Europe.

Cows are among the animals susceptible to bluetongue (Andrew Matthews/PA) (PA Archive)

While officials say there is no evidence that bluetongue is circulating in midges – which spread the disease – in Britain, the Government warns the insects can be blown long distances on the wind from mainland Europe.

Officials said there has been a rapid increase in cases in the Netherlands and Germany, and new cases in France, Luxembourg and Denmark, which means Britain is at greater risk of the disease in susceptible animals.

Bluetongue is an animal disease that affects livestock including cattle and sheep, as well as goats, deer and llamas, with symptoms including a blue and swollen tongue, fever, reduced milk yield, and, in the most severe cases, death.

It does not affect humans or food safety.