June 11 - From July 1, Arla Foods is to increase the payment to its organic co-operative members in both Denmark and Sweden to attract more organic producers.
Arla Foods is continuing its campaign to get more conventional milk producers to go organic. The Board of Directors has decided to raise the so-called organic supplement for Danish co-operative members by 10 Danish øre per kg milk from July 1, 2008. Consequently, the organic supplement, which is an additional payment Arla organic producers receive for producing organic milk, will be 67.9 øre per kg.
“We’re raising the organic supplement out of a wish to source more organic milk as there is clearly a need for it,” says Arla Foods’ Vice CEO Povl Krogsgaard.
In a new departure, the 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.
“We believe that interest in organic production will continue to grow both in Denmark and Sweden and abroad,” says CEO Peder Tuborgh. “We want to be known as a dairy that does most to promote organic in Europe so that it becomes accessible and relevant to a large group of consumers. But this requires more organic producers. If organic becomes a niche product that is only intended for a narrow group of consumers with high disposable incomes – it’s meaningless.”
Arla Foods’ organic target is to continue to increase the annual weigh-in of organic milk to 375 million kg in Denmark and 266 million kg in Sweden before 2011. In Denmark, Arla lacks 55 million kg to achieve the target while Sweden is 100 million kg short.
Consequently, Arla is raising the organic supplement even more in Sweden, i.e. by 28.4 Danish øre per kg as the lack of organic milk is acute in the Swedish market. As consumer demand is currently booming in Sweden, Arla Foods wants to play a bigger role.
“In Sweden, we don’t have enough organic milk to achieve our weigh-in target,” says Povl Krogsgaard. “Consequently we have to implement a bigger increase in Sweden than in Denmark.”
Arla Foods is currently the world’s largest producer of organic milk products.