Dairy farmers promised greater control over their milk

The proposal, which has been announced by the board of directors for the company’s cooperative, Arla Foods amba, and the board of Arla’s investment arm Milk Partnership Limited, could double the number of British dairy farmers signed up as co-owners and would give those new to co-ownership a greater degree of control over their produce.

The move follows the merger of Milk Link, another group of Arla UK suppliers, with Arla Food amba last October, and changes to the conditions of the merger have now been announced.

The changes will see Arla Milk Link members receive Arla Foods amba’s 13th supplementary payment two years ahead of schedule, with effect from January 1 next year.

The first payment will be received early in 2015 on milk supplied during 2014. The supplementary payment is an additional annual payment of the global company’s profit, paid out on a pence per litre basis, after the year end, usually in March.

Johnnie Russell, director of Arla Milk Link and Arla Foods amba, said the proposals were good news for its British suppliers.

“This is an extremely important milestone for the development of Arla’s business in the UK,” he said.

“The original agreement with Milk Link, which allowed for a three-and-a-half year transition period to full membership, was negotiated on the basis of a historic performance price gap which does not currently exist, given the strong business performance in the UK since the merger in 2012.

“This will be welcome news for Arla Milk Link farmers and further emphasises the benefits of Arla amba membership.

In other structural changes, Milk Partnership Limited is set to become owner of Arla Foods amba with effect from 1 January 2014 and farmers who elect to join the co-operative will receive the same membership rights as existing co-owners.

Existing suppliers are invited to take up the ownership offer and Milk Partnership farmers not wishing to take up the offer can transfer to an Arla direct contract.

From 1 January 2014, Milk Partnership farmers will receive the Arla Foods performance price, which includes the amba standard litre price, plus a supplementary payment, and will benefit from individual consolidation and collective (common) consolidation, Arla said.

Arla UK collects more than 3.2bn litres of milk a year and is sold under two milk brands, Cravendale and Lactofree. It produces Anchor and Lurpak butter and is the UK’s largest cheese manufacturer, generating a £2.1bn turnover last year.