Arla to raise organic premium for farmers

With its organic sales continuing to climb, farmer-owned Arla Foods has decided to increase its organic premium by 2 eurocent pr. kilo of milk effective March 2nd 2015 for farmers in Sweden, Denmark, UK and Central Europe.

Arla must continue to drive and develop the organic dairy market in the future. This ambition was confirmed by the Board of Directors in a meeting last week, where the board also agreed that the organic premium in Arla should continue to be based on the balance between the supply of organic raw milk and the demand for organic dairy products.

Consequently, Arla’s management has decided to increase the organic premium for organic milk by 2 eurocent pr. kilo for its organic farmers in Sweden, Denmark, UK and Central Europe effective March 2nd 2015.

“We have a clear ambition to drive and develop the organic dairy market in Europe. It’s good business for all of our farmers when we sell more organic products, and with our growing sales of organic products in Europe and beyond, we foresee a need for more organic milk in coming months and years. We are therefore increasing the organic premium to our farmers,” says vice-CEO in Arla Foods, Povl Krogsgaard.

“The global retail and industry markets are under pressure at the moment, and we are aware of the fact that this has reduced the earnings of our dairy farmers, both conventional and organic. However, this situation only underlines the increasing need to earn as much money as possible on value-added products on consumer markets. Organic products are really important in this regard, and we need to ensure that we have enough organic raw milk to drive our organic business forward for the benefit of all our farmers,” he says.

New recruitment to be considered
In the coming months Arla will analyse the possible need for further recruitment of new organic farmers, however at this time the increased organic premium is expected to lead to an increase in production from Arla’s current organic farmers.

“It is still too soon to say whether we will need to recruit more organic farmers and, if so, in what countries. We are continuing to sell more organic products, and we are looking closely at our supply chain to analyse where our need for more organic milk will require new recruitments. Overall, we will need more organic milk in the future to support our growing sales,” says Povl Krogsgaard.

Premium procedure in place
Arla’s board of directors has also decided that the organic premium must be set by the management in January each year, followed by quarterly reviews that can lead to adjustments of the premium more than once pr. year. Just like before, the organic premium can differ from country to country based on the balance between supply and demand.

Read more about Arla’s vision for organic dairy products here:
http://www.arla.com/our-brands/brands/arla-organic/arlas-vision-for-organic-dairy-products/