Arla farmers could achieve up to £437 million pound a year for sustainability actions

Arla have today announced that up to £437 million (500 million Euros) has been allocated each year to reward its members for on farm climate and sustainability activities.

Starting with the August 2023 payment for deliveries in July around 7% of Arla members milk price (at current circa 50p level) will be available on a voluntary participation basis.  Having said that given 95% of Arla farmers covering 99% of Arla European milk pool have already registered on the 2022 climate check, only those exiting the industry plus the awkward squad will remain as non-participants in the initiative who will simply receive a lower milk price.

Both minorities will, In Ian’s opinion, have their Arla membership days numbered given it looks inevitable that Arla will market its sustainability credentials to its worldwide customer base as applicable to 100% of its milk.

The launch of today’s package has evolved over the past 3 years in terms of testing, trialling and evaluation and for sure it’s a big move by the Co-op and one competitor milk processors will have to monitor and, in some instances, it will be necessary to replicate in some form. 

There will be some who dismiss it and say no hurdles, none of that climate mumbo jumbo, no calf euthanasia policy just send us the milk and we will leave you to do the farming.  Whether their model is sustainable and has longevity is very debatable.

 

The current 99% of Arla members from July will see their milk cheque values partly determined by their on farm sustainability activities.

In order to participate Arla members will first have to sign up to submitting their climate check data which will earn them 1 euro cent/litre.

A further 3 euro cents per kg milk making a total of 4 euro cents will eventually be gained by those who achieve 100 points.  From July 2023 a maximum 80 points plus data registration will attract an additional payment of 3.4 euro cents.

In the first 12 months the expectation is that £238 million (270 million Euros) will be distributed through the monthly milk payments which will involve 19 data points with more to follow along with more points and money.  Arla will be offering on farm help to maximise farmers points and share best practices.

The online tool will be available to farmers from January to input data for 6 months prior to the payment window opening.  Whilst Arla were reluctant to divulge numbers there was confirmation that from the number of those currently participating several are already achieving over 80% of maximum points with the average participant achieving 2.17 euro cents of the 3.4 maximum available.

The average Arla farmer will have the opportunity to be paid up to £23,000 (26,000 euros) through this initiative and looking at the numbers it looks set to motivate and accelerate on farm attitudes and change.

 

The model will reach way beyond the farmgate coupled with positive actions from others in the dairy supply chain.  Arlas customers will have their own climate and sustainability goals and collectively it should be a powerful marketing tool to ensure consumers and Arlas customers know what Arlas Dairy products stand for.

 

It’s a big move by the European Dairy Giant and it looks like another case of catch Arla if you can!