August 21, 2023

 

Arla to rewards its farmers US$2.3 billion for sustainability efforts

 

Danish-Swedish cooperative dairy firm Arla has issued its first monthly incentive payments, reflecting the outcomes of climate and sustainability activities being implemented on their farms, underpinned by a data-driven and science-based points system, Foodbev Media reported.

 

Under this approach, Arla farmers who exhibit the most proactive engagement in climate-related activities will be eligible for an elevated milk price. The inaugural payment, totalling EUR 300 million (~US$326 million; EUR 1 = US$1.09), has been initiated. With the cooperative's current points-based framework, projections suggest a potential EUR 2.2 billion (~US$2.3 billion) pay out to farmers for their sustainability efforts by the end of 2030. This figure is anticipated to rise as farmers, spurred by the incentive, continue to enhance their climate-focused practices.

 

The Sustainability Incentive model was introduced by Arla in October of the previous year, strategically designed to reward farmers for their contributions to climate and environment-enhancing initiatives.

 

Arla asserts that this incentive structure guarantees that consumers are not only contributing to supporting sustainable dairy farming but are also facilitating a swift transition toward more environmentally conscious practices within the industry.

 

Commenting on this milestone, Peder Tuborgh, chief executive officer of Arla, said the Sustainability Incentive plays a pivotal role in connecting economic outcomes with climate and environmental improvements on farms.

 

Tuborgh said that Arla's distinctive point system empowers the cooperative to financially acknowledge the commitment of its owners while propelling them towards achieving the ambitious climate targets set for 2030.

 

In the year 2022, Arla farmers in seven countries reportedly achieved a reduction of over 2% in CO2e emissions associated with their milk production.

 

As part of this innovative framework, Arla's farmer owners stand to gain an average of EUR 1.44 (~US$1.57) per kg of milk through the Sustainability Incentive. Additionally, a supplementary EUR 1 (~US$1.09), per kg is allocated for submitting the requisite Climate Check data, further underscoring Arla's commitment to data-driven sustainability efforts. For an average Arla farm producing 1.6 million kg of milk annually, the cumulative value of these incentives approximates EUR 40,000 (~US$43,000) per year.

 

Jan Toft Norgaard, chairman of the board at Arla Foods, lauded the dedication of the cooperative's owners in reducing emissions and enhancing their ecological footprint.

 

The monthly incentive structure is set to be updated quarterly, with the annual allocation dependent on the scope of sustainability endeavours undertaken by each farm and the overall milk volume encompassed by Arla's operations.

 

-      Foodbev Media