Enthusiasm members cost Arla many millions of euros

They can earn the premium by meeting a series of conditions, which is rewarded with points. An additional 0,03 cents per kilo of milk can be earned per point. A total of 80 points can be earned.

The members have responded more enthusiastically to the program than initially anticipated, Arla reports. As a result, €300 million will be allocated this year for additional payments to farmers. For the longer term, up to €500 million per year in additional money is available for the CO2 program. Based on current figures, Arla Foods will pay out a total of 2030 billion euros until the end of 2,2, the company expects.

However, not all additional payments to members consist of new money. Arla implemented the new system in a milk price neutral manner as of July. In other words; With the introduction of the new system of surcharges, the basic price has also been reduced by €1,44 per 100 kilos. The Climate Check fee of €1,00 per 100 kilos has also existed for some time.

Arla introduced the sustainability fee model in the autumn of 2022, in consultation with the members. The model rewards climate and environmental initiatives and builds on, among other things, the data obtained from the Climate Check since 2019. It meets the Science Based Targets Initiative criteria for ambitious value chain goals. The aim is to emit a total of 2030% less CO30 emissions on the farm by 2 and to be net climate neutral by 2050.

The 80 money-making points can be earned based on 19 scoring components – such as feed and protein efficiency, manure processing, sustainable feed, renewable electricity and land use. The measures that have the most positive effect on sustainability earn the most points – and the highest financial compensation. It is expected that further points will be added in the coming years as new science-based knowledge and technologies become available. 

Exceeded expectations
In the period 2021 to 2022, Arla Foods' total CO2e emissions per kilo of milk decreased by 2,4 percent. This is evident from data from Arla Foods' Climate Check. The reason is that dairy farmers, among other things, produced and used feed more efficiently, used less fertilizer, improved their manure storage, reduced energy consumption and switched to more renewable electricity.

During the introduction of the sustainability compensation model, it was predicted that cooperative members would achieve an average of 39 points out of a possible 80 in the new points system. The first inventory shows that an average of 48 points will be achieved based on the initiatives registered at the end of June 2023. The 48 points mean that Arla Foods pays out an average of 1,44 euro cents per kilogram of milk to its members in seven countries through the sustainability payment.

In addition, 1 euro cent per kilo of milk is charged for supplying the Climate Check data required to take advantage of the sustainability payment. This is an already existing fee. For an average Arla farm with an annual milk production of 1,6 million kilograms, 2,44 euro cents in total corresponds to almost 40.000 euros per year.