Arla accelerating on-farm climate action by earmarking €500m for farmer incentive

The horror of the war in Ukraine has shown how sensitive the global food system is to external shocks. The war’s repercussions have accelerated the trends we saw developing in Europe in 2021. On-farm costs have soared as inflation has hit everything from feed to energy. Supply chains have struggled to adapt following the COVID pandemic. Farmers are not alone in experiencing these challenges, but the impact has been felt acutely in an industry that operates on such small margins.

With the backdrop of this global crisis it would be easy to take our eye off the ball of the other related, major global challenge: Sustainable food production. At Arla Foods, our farmer owners remain committed to this journey. Our sustainability strategy includes carbon net zero milk by 2050, and a 2030 plan that has been approved by the Science Based Targets initiative as consistent with reductions required to keep global warming to 1.5°C.

Last month we took another big step as we announced a sustainability incentive scheme. Through the scheme, we will earmark €500m to reward current action and incentivise future sustainability activity on our dairy farms.

Starting in 2023, the model will allow farmers to collect points based on 19 different actions that have the greatest effect on emission reductions and environmental enhancement. Each point is worth 0.03 Euro cents/kg milk. This means the payment Arla farmers receive for their milk will depend not only on fat, protein, and quality but also on sustainability actions.

The incentive model builds on the data collected via our Climate Check tool which is one of the world’s largest on-farm carbon databases with data gathered from more than 8000 farms across seven European Countries over the past three years.

Arla’s Chairman, Jon Toft Nørgaard, describes the Incentive Model as “a historical milestone in Arla’s transition to more sustainable dairy”. Supported by our owners during a time of great uncertainty, the model is “a testament to our commitment to be at the forefront of progressive dairy farming and set the standard for our whole sector,”.

Supported by our owners during a time of great uncertainty, the model is “a testament to our commitment to be at the forefront of progressive dairy farming and set the standard for our whole sector,”

To meet the EU’s ambition of reducing greenhouse gas emissions, every sector across Europe needs to contribute. Dairy is leaning in. But to accelerate the journey we need politics and policy to create a supportive environment. In Brussels, this means legislative consistency across agricultural, energy, economic and consumer policy that gives farmers the clarity and confidence to continue investing in their businesses, despite the headwinds.

Dairy plays a unique role in the Continent’s food culture and economy. As a leading farmer owned cooperative, I am proud that we have taken this substantial step to accelerate the transition to sustainable dairy farming. Now I look to policymakers to support European dairy farmers on their journey.

George Morrison

Director of Global Public Affairs at Arla Foods