Arla sets aside billions for new green course

Arla wants to go green in the coming years. The new strategy allocates €4 billion to invest in a new sustainable price, while increasing the dividend by €1 billion. The Scandinavian dairy cooperative wants to distinguish itself in the field of sustainability and says it has the support of the member dairy farmers.

Arla's new strategy, which lives up to its name Future 26, breathes sustainability. CEO Peter Tuborgh is optimistic about the future, he said during a digital press conference. "We want to be a leader in sustainable dairy production and value creation. Now is the time for change." Arla pulls out a lot of money to realize the plans. Over the next five years, no less than €4 billion will be invested in sustainability, digitization, product development and new production techniques. “We have a strong balance sheet that allows us to invest such large sums,” said Tuborgh.

In addition, the approximately 10.000 member dairy farmers in five countries where the cooperative is represented will jointly distribute €1 billion in dividends in the coming years. This is intended to support dairy farmers in taking green measures. What these entail in concrete terms is not stated in the strategy. The standard supplementary payment will be increased from €1 to €1,50 per 100 kilos of milk. There is a 'but' to this promise. This only applies if the margin is 2,8% of the turnover. The supplementary payment will also be paid out in two instalments, in order to meet the liquidity requirements of dairy farmers.

Members support course
Arla looks enthusiastically to the future. The global dairy market will grow by 2026% each year until 2. The growth is mainly in the Middle East, Africa and Asia due to population growth, urbanization and increasing prosperity. In its home market Europe, Arla does not expect volume growth so much, but a changed consumption pattern towards more healthy and sustainable dairy. The dairy cooperative wants to respond to this.

When asked, the CEO says that the new green course is supported by the cooperative's member dairy farmers. "Society is becoming more sustainable, our members notice that too. It is therefore not a question of why we become more sustainable, but how we do it," adds cooperative chairman Jan Toft Nørgaard. In addition to making it more sustainable on the farm, Arla wants to reduce CO2 emissions in logistics and production. In addition, the packaging material must eventually be 100% recyclable.

Growing in branded dairy
In addition to sustainability, Arla will focus strongly on added value through branded dairy over the next five years. With strong brands such as Arla, Lurpak, Castello, Puck and Starbucks, the cooperative dairy group aims to grow 3 to 4% annually. Arla also wants to grow in e-commerce and the food service channel.

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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