DENMARK – Dairy giant Arla Foods has introduced a new point-based Sustainability Incentive model that builds on data from the Climate Check, by offering 2.40eurocents per kg of milk to participating farmers based on their points tally, which will be awarded across 19 levers.
Two years ago, Arla implemented a Climate Check on 8,000 farms across seven European countries which provided one Eurocent for submitting Climate Check data.
The three-Eurocent policy comes on top of the one Eurocent that farmers already receive.
At the start of the voluntary rewards system designed to encourage farmers to adopt sustainable practices, 80 points will be available for a total of 2.40eurocents, with another 20 expected to be implemented in the future to bring the total to 3eurocents.
Arla expects to distribute at least €270m (US$262.15m) in the first full year of the initiative, this being based on an average of 39 points or 2.17eurocent per kg of milk for achieved points.
For an average farm that delivers 1.2m kg of milk yearly, that would bring in an additional €26,000 to the farm’s collective earnings.
According to Arla, the scheme has a strong focus on climate activities and will be key to reaching the co-op’s scope 3 targets for 2030, for which it must reduce greenhouse gasses per ton of standardized raw milk and whey by 30%.
Farms looking to enter the scheme have to submit data through Arla’s online tool Climate Check, which requires farmers to answer 203 questions about their herd, feed production, and energy usage among others. Doing so will earn them 1eurocent on top of the points-based earnings.
The co-op said around 95% of its farmers have already registered their data through the Climate Check tool, making them eligible to start earning points right away.
Jan Toft Nørgaard, Arla’s Chairman said: “We are introducing an advanced and ambitious sustainability incentive, which is a fundamental change to our milk price model.”
“The support from our members, even in a time of great uncertainty, is a testament to our commitment to being at the forefront of progressive dairy farming and setting the standard for how to push our whole sector forward.”
The levers with the biggest impact potential will trigger the most points – these categories are the so-called ‘big 5’, which Arla has identified as feed efficiency, fertilizer, and land use, protein efficiency, and ‘animal robustness’ i.e., herd health.
Other levers include manure handling, sustainable feed, renewable electricity, and biodiversity and carbon farming
The first incentive payment will be paid out as part of the monthly milk price in August 2023, based on milk delivered in July.
The payment will be calculated on 2022 Climate Checks data and any additional documentation that the farmer has uploaded.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro-industry. SUBSCRIBE HERE.
