The UK's largest dairy has warned milk supplies could be under threat unless its farmers are paid more, stated a recent report.
Costs are increasing at rates never seen before and that farmers can no longer cover their expenses, managing director of Arla Foods has said, adding that farmers need to secure a higher price from Arla's customers.
"Because of the recent crisis, feed, fuel and fertiliser have rocketed and therefore cashflow on the farm is negative," Ash Amirahmadi told BBC.
He added farmers are producing less milk as a result of the higher costs.
"UK dairy farmers have been producing more for about the last seven to eight years but it's now going the other way," said Amirahmadi.
"In February, they produced 2 percent less and in March it's 4 percent."
With cost increases of some 36 percent, he warned farmers are facing some hard decisions and that they need confidence to carry on producing.
And that means securing a higher price from Arla's customers - the supermarkets.
"The most important thing now is that we put our arm around the farmers…and pay our farmers more to cover their costs to make sure the milk is flowing, " said Amirahmadi.
Arla Foods is the fifth biggest dairy company in the world and the largest supplier of fresh milk and cream in the UK. The co-operative has 2,100 dairy farmers in the UK and 8,950 across Europe.
Announcing a new five-year growth strategy for its UK arm, the co-operative said it will explore export opportunities out of the UK for the first time.
Arla said that as part of the group’s Future26 strategy, it will explore opportunities to begin exporting raw milk from the UK to its global supply chain and has already begun trials to move milk to its European processing sites.
The group added that it plans to grow its UK business through a combination of branded and added-value private-label innovation in prioritised categories such as liquid milk, yoghurts, butter and spreads, milk-based beverages and cheese.
