Arla Foods’ milk producers should be prepared for a lengthy struggle that may last up to seven years, Chairman Knud Erik Jensen told the Group’s Board of Representatives last week.

In view of the considerable challenges facing Arla Foods over the coming years, Knud Erik Jensen raised the following question: ”We must ask ourselves ”How can we produce milk for DKK 2 per kg until 2010?”
In recent years the milk price per kg has hovered around the DKK 2.50 per kg mark.

Knud Erik Jensen pointed towards three immediate challenges:
- The EU’s enlargement by ten new members from May 1 this year will strengthen competition within the single market.
- The EU’s agricultural reform will lead to lower intervention prices.
- The lower dollar will encourage European dairy companies to focus on European markets, which will result in tougher competition.
The expected price fall will, however, be partially offset by EU compensation payments. These have not yet been determined and will vary from country to country.

Knud Erik Jensen emphasised that Arla Foods will do everything in its power to respond to the changes.

”It’s important to realise that the changes stemming from the agricultural reform and other market conditions are so extensive that price falls for milk are inevitable. A level of DKK 2 per kg is a realistic consequence of the changes. After all, it’s better to be prepared for a price around this level now and then be pleasantly surprised, than the other way around,” Knud Erik Jensen said.



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