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Arla to incentivise farmers to convert to GM free feed

Posted: 13 May 2016 | | No comments yet

Arla says that retailers are increasingly demanding dairy products from cows which have been fed GM free feed and are willing to pay a price premium…

Arla has announced that it is to start to incentivise more farmers to convert to GM free feed.

GM free feed

The decision to incentivise the use of GM free feed has been made by Arla’s Board of Directors on the back of recent developments in Germany, where retailers are increasingly demanding dairy products from cows which have been fed GM free feed and are willing to pay a price premium. The trend is likely to spread to other markets and Arla has said it wants to capture this opportunity immediately to add value to its farmers’ milk.

Chairman Åke Hantoft said Arla is well-prepared to meet the growing demand: “We own the biggest organic milk pool in the world, for which the feed is by default GM free. Our Swedish farmers have always used GM free feed. This means that around 20% of Arla’s milk pool already meets this market demand. There is commercial potential in this that we can capture and build on immediately by attracting more farmers who are willing to convert to GM free feed.”

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He underlines that the decision is based on the commercial opportunity and does not indicate that Arla’s owners are taking a new stand on GM: “We welcome innovative solutions and new technology, which can improve farming and help feed the world’s growing population in a sustainable manner. We are not closing a door on GM and we will continue to monitor the scientific research into the pros and cons of GM going for-ward.”

Arla to compensate farmers as they convert to GM free feed

Converting to GM free feed will be a cost for the farmers. However, following the price premium that the retailers and the consumers will be willing to pay, Arla will compensate the farmers as they convert. This model driven by market demand is also used for organic milk, for which the farmers are already compensated for the extra feed cost.

“Our immediate demand is up to 1 bn kg extra milk during the next 12 months and we expect to be able to pay an extra 1 eurocent per kg milk. The market driven compensation will also be paid to all our Swedish farmers, who already use GM free feed. We do not know exactly from when, but we are working fast to unfold the details,” says CEO Peder Tuborgh.

The practical challenges in the company and on the farm are still to be investigated.

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