EUROPE – European dairy cooperative, ArlaFoods has introduced a data-driven and science-based points system to its farmer owners that would reward them up to US$2.39 billion of additional income based on their sustainability efforts.
The first US$326.4 million payment to farmers has already been activated to the benefit of farmers taking more action.
“I have been looking forward to this. The sustainability incentive is a large step toward linking the economy, climate, and nature improvements on farms,” Peder Tuborgh, Arla’s CEO said.
“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.”
Arla paid out on average US$1.57 per kilo of milk produced which for an average Arla farm with milk production of 1.6 million kg, amounts to US$43,600.
In addition to this is another US$1.09 cents per kilo of milk for submitting the Climate Check, which Arla requires to qualify for the sustainability incentive.
According to the company’s spokesperson, 95% of the cooperative’s farmer-owners, covering 99% of its milk pool, submitted data to the Climate Check platform in 2022.
Payments are capped at US$2.4 cents for each kilo of milk produced. When designing the plan, Arla initially expected to pay US$2.1 cents in benefits.
This was based on calculations of farmers receiving 39 points out of 80. However, the average farmer was more sustainable than initially predicted and achieved 48 points.
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 added 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.
Earlier in July, Arla joined forces with Blue Ocean Closures to develop a new cap made from biodegradable and recyclable fiber material. The closure will potentially reduce Arla’s plastic consumption by 500 metric tons annually.