Arla unveils financial incentives for dairy farmers to speed up CO2 reduction

Arla Foods today unveiled a new sustainability incentive to encourage its farmers reduce their carbon emissions.

From next year, the milk price that the individual Arla farmer will receive from the dairy cooperative will depend on their activities related to environmental sustainability.

Arla, which works with 2,100 farmers across the UK including 177 in Yorkshire, has earmarked up to 500m Euros annually to reward them on their climate activities through a points-based system, which covers a number of key areas. including the so-called ‘big five’ of feed efficiency, fertiliser use, land use, protein efficiency and animal robustness.

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The Board of Directors is putting up to three eurocent per kilo of milk on the table annually to fund and motivate environmental improvements. When the scheme is fully up and running, there will be 100 points available to farmers, with each point worth 0.03 eurocents.

From next year, the milk price that the individual Arla farmer will receive from the dairy cooperative will depend on their activities related to environmental sustainability.From next year, the milk price that the individual Arla farmer will receive from the dairy cooperative will depend on their activities related to environmental sustainability.
From next year, the milk price that the individual Arla farmer will receive from the dairy cooperative will depend on their activities related to environmental sustainability.

Arla is targeting a 30 per cent reduction of CO2 per kg of milk by 2030 – a first step on its journey to carbon net zero.

The new model builds on data from the Climate Check it launched two years ago on 8,000 farms across seven European countries.

The full incentive package includes the one eurocent that farmers will receive for submitting their Climate Check data. Climate specialists will assess and verify the data that farmers submit on an annual basis.

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In the first full year, at least 270m Euros is expected to be distributed through the monthly milk price based on what the farmers are doing.

Speaking to The Yorkshire Post, Graham Wilkinson, Arla’s vice president for global agriculture, said: “This marks a fundamental change in how we’re evolving our milk price. We believe it’s the first of its kind in the UK.”

He added: “The model itself has been developed with our farmers. We’ve been working closely with them over a number of months to get to where we are today.

"The idea behind is to encourage, motivate, support and give knowledge to all of them so they make small changes that will together make a big difference.”

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Arla employs around 450 people at its Stourton dairy site near Leeds and 400 staff at its national distribution centre, which is next to the Stourton dairy. It also employs around 400 staff at its Leeds head office.

Its Yorkshire farmers produce 280 million litres of milk from approximately 30,000 cows.

Mr Wilkinson said the reaction to the new model from farmers was positive overall. "There’s very little investment needed for the big five but when you look beyond that to renewable energy, manure handling and some of the future areas then this is where investment will be needed on farms,” he said.

"But as we start this journey we’re not expecting farmers to have to make significant investments at this moment, but they will come in time.”

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He added: “I think the real push for us now will be through farmer workshops, farmers learning from other farmers and sharing best practice.”

Arla’s most recent Climate Check data shows that its farmers are among the most climate-efficient dairy farmers in the world with 1.15 kg of CO2e per kilo of milk, about half the global average.

"Our reduction has so far been about one percentage point year-on-year. We need to speed that up to three per cent year-on-year to be able to achieve our 30 per cent target,” Mr Wilkinson said.

He added: “To feed the world sustainably, foods need to become more carbon efficient. We’ve done a lot of work so far and I think the incentive model and how we actually reward farmerss for positive actions that they can take on their farms, will really help us to achieve that.”

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