DAIRY big hitters Arla and Muller have both announced further price drops for their producers. Arla's milk prices will drop significantly from 1 April as the co-operative has announced a huge 5.30p per litre decrease. The dairy co-op's milk prices for April 2023 will decrease for both conventional and organic milk, to 39.64ppl and 44.42ppl respectively.

Arla warned that the severity of the ongoing cost of living crisis and volatile economic environment was continuing to negatively impact consumer demand for milk.

The co-op, which is supplied by 3000 UK farmers, added that consistently high inflation continued to drive a reduction in consumer demand.

"Commodity prices continue to decline significantly especially as global milk volumes increase overall," said Arla Foods director, Arthur Fearnall.

"The outlook is moving towards stabilisation as commodity markets get closer to balance."

Paul Savage, agriculture director for Arla UK, added that milk supply in the UK had continued to grow in the last month, with milk supplies up 3.2% compared with March 2022.

"This increase in supply has not only been seen in the UK but also across Europe and the globe," he explained.

"When coupled with a decline in dairy consumption and an overall decline in shopping spending, with 75% of people cutting expenditure on food, this is creating a change in the supply and demand of milk.

"We recognise that some of our farmer owners continue to face increasing input costs on farm and as a farmer owned cooperative we are doing all we can to continue to support our farmer owners.”

READ MORE: Do you know how to reduce the impact of falling milk prices?

Meanwhile, Muller has announced a 2.5p per litre milk price fall for May.

Dairy farmers supplying Muller who meet the conditions of the processor's Advantage scheme will see their milk price fall to 40p per litre from May 1.

This is a 2.5p per litre decline compared to the month before.

Head of agriculture at Müller Milk and Ingredients, Richard Collins, said the news came amid continuing market pressures.

He said: "Millions of people buy our dairy products every day and we remain committed to paying a competitive milk price and ensuring security of supply.”

Elsewhere First Milk suppliers are expecting a drop in their milk price to be announced in the middle of the month for May. Currently their milk price is 42.5ppl but it is likely the price will fall for collections next month.

These announcements are being made as the spring flush is fast approaching which will see increased supplies of milk on the market. The Global Dairy Trade (GDT) price index has also been falling for a number of months and dairy cows sold at auction have dropped £300 to £400 per animal since the peak last autumn.

When the Scottish Farmer spoke to a number of dairy farmers this week there was disappointment that the milk price was dropping so quickly. They were all adamant that if prices were to continue to drop then a fall in cow numbers would soon follow.