Arla to reward farmers €2.2 billion for sustainability efforts

Arla has committed to paying its farmers a combined total of €2.2 billion as a way to reward and motivate climate initiatives.

The dairy cooperative has said that, for the first time, it has paid out a monthly incentive to its farmer owners’ milk price rewarding climate activities and other sustainability efforts being made on their farms. It has said that the money will be allocated using a data-driven and science-based points system.

“Farmers have implemented more activities than first anticipated and based on the current level, Arla stands to pay out €2.2 billion until the end of 2030 for farmers’ sustainability activities,” explained Arla. However it has claimed that it has “earmarked a bigger amount as it expects its farmer owners to raise the bar significantly higher”.

What’s more, Arla has announced that, as of 14 August, Arla farmers “taking the most action on climate” will receive a higher price for their milk. This initiative comes following Arla’s Sustainability Incentive model being implemented in 2022. This model rewards farmers for the climate and environment-enhancing initiatives they undertake.

Arla introduces new Sustainability Incentive model

Now, Arla has confirmed to consumers that it is “guaranteed that a part of the price they pay for Arla’s products helps reward and motivate a faster transition to more sustainable dairy farming”.

Commenting on the incentives, Arla’s CEO, Peder Tuborgh, said ”I have been looking forward to this. The Sustainability Incentive is a large step towards linking economy and climate and nature improvements on farm.

“Arla’s unique point system makes it possible for us to reward our owners and thus contribute to their large investments in sustainability. At the same time, we strengthen the farmers’ motivation to implement the initiatives necessary for our cooperative to reach its ambitious climate goals for 2030.”

The dairy cooperative has reportedly earmarked up to €500 million each year to reward and motivate farmers, of which €300 million is now activated.  

However, Arla has claimed that farmers exceed expectations in 2022 alone, with farmers across seven countries reportedly reducing their CO2e emissions from their milk by more than two percent. Arla has said that part of the reasoning for this is because “the farmers have produced and used feed more efficiently, used less fertiliser, improved their manure storage, reduced energy consumption and shifted to more renewable electricity”.

”Our owners are working determinedly to reduce emissions on their farm. There is a great commitment in our cooperative to show our consumers, our industry and society in general that we as Arla farmers are able to produce milk with an increasingly smaller footprint on climate and nature,” said Jan Toft Nørgaard, Chairman of the Board at Arla Foods.

“It is a significant effort for the individual farmer; however, many are well on their way and together we can motivate each other, e.g. through a financial incentive using our new points-based model. I am excited to watch the level going forward, because with this large engagement we will be able to move really far in a short period of time,” concluded Toft Nørgaard.