Dairy giant Arla to pay farmers more for milk if they cut emissions

Image: Arla

Announced today (7 October), Arla’s sustainability incentive scheme will see dairy farmers paid up to three European cents more per kilogram of milk they deliver. This is in addition to a one-cent-per-kilogram incentive already on offer for suppliers who submit emissions data to Arla.

Arla expects that it will cost up to  €500m extra per year to run the expanded incentive scheme and the business will be taking this money from profits. It believes it is the first large international dairy firm to introduce such a scheme.

The incentive model is a points-based system, in which farmers are scored based on the steps they’re taking on a number of different issues, including renewable electricity procurement; good manure management; efficient fertiliser use; sustainable and efficient feed use; converting manure into biogas; improving biodiversity on farms and addressing deforestation in feed supply chains.

Farmers will only be able to access the incentives if they sign up to Arla’s ‘Climate Check’ initiative and disclose their emissions. Arla has notably committed to reducing emissions across its value chain emissions by 30% by 2030. Given that farming accounts for 83% of its emissions footprint, this is a key focus area. 95% of Arla farmers, who collectively produce more than 99% of its milk, are already participating in ‘Climate Check’.

“Arla has some of the most climate-efficient farmers in the world, however, they also recognise that they need to accelerate their efforts to be at the forefront of environmentally sustainable dairy,” said the firm’s chief executive Peder Tuborgh.

“With this historical step, we will stand stronger in the market and send a clear message to our customers and consumers that the necessary change comes at a price for our owners and that a fair amount of the money you pay for Arla products is directed to the farmers who take the most action.”

The UN estimates that meat and dairy production account for some 14.5% of annual global emissions. Dairy alone is estimated to account for 3.4%.