Arla increases organic supplement to attract producers

Arla Foods, the world's largest producer of organic milk products, will increase its payment to its organic cooperative members in Denmark and Sweden to attract more organic producers.

The organic supplement for Danish cooperative members will be raised by 10 Danish ore per kilogramme milk from July 1 this year, while the organic supplement, which is an additional payment Arla organic producers receive for producing organic milk, will be 67.9 ore per kilogramme.

Arla's Board of Directors has abandoned the principle that the organic supplement should reflect the additional costs of organic production. In future, the supplement will be based on the company's raw organic milk requirements and reflect Arla's wish to source more organic milk.

Arla's organic target is to continue to increase the annual weigh-in of organic milk to 375 million kilogrammes in Denmark and 266 million kilogrammes in Sweden before 2011.

In Denmark, Arla lacks 55 million kilogrammes to achieve the target while Sweden is 100 million kilogrammes short.

Arla is raising the organic supplement by 28.4 Danish ore per kilogramme in Sweden as the lack of organic milk is acute in the Swedish market. As consumer demand is currently booming in Sweden, Arla wants to play a bigger role.

DKK1 (100 Danish ore) = US$0.21 as of June 18