Lurpak-owner Arla warns prices will rise further

Dairy cooperative Arla Foods, maker of Lurpak butter, said on Tuesday significant price increases had boosted sales in the first six months of the year but warned that consumers would spend less as prices are expected to rise further.

Dairy cooperative Arla Foods, the maker of Lurpak butter, said on Tuesday that significant price increases had boosted sales in the first six months of the year but warned that consumers would spend less as prices are expected to rise further. Arla, owned by more than 9,400 farmers in Denmark, Britain, Sweden, Germany, Belgium, Luxemburg, and the Netherlands, said sales between January and June rose 17% from a year earlier to 6.38 billion euros ($6.40 billion).

The rise was driven by "significant price increases" in Arla's retail and food service and commodity trading business, even as volumes declined. The Denmark-based cooperative said higher prices would not lead to increased production due to higher costs on the farm, with the price of fertilizer up by 145%, fuel by 134%, and cow feed by 36%.

"With ongoing inflationary pressure and political unrest negatively impacting global growth, Arla expects the second half of 2022 to be even more challenging as the global milk production is expected to decline further and contribute to sustained high dairy prices, which will likely further diminish consumer confidence and consumption," the company said in a statement. ($1 = 0.9969 euros)