Arla increases payment to cooperative farmers

With Arla maintaining its profit projections for 2010 of DKK 1.2 billion, there is scope for increasing the price to co-operative members for the fifth time this year.

Arla Foods has decided to raise the price paid to co-operative owners by 10 øre with retrospective effect from 1 November, 2010. This will bring the Arla price to 280.5 øre/kg for conventional milk and 338.4 øre/kg for organic milk.

The latest rise means that the Arla price has increased five times in 2010 by a total of 47.5 øre, equating to an increased payout to Arla’s owners of DKK 1.2 billion.

It should, however, be borne in mind that the milk price in 2009 was extremely low during the first months of the year.

”During 2010, the global market improved viewed against the crisis year of 2009. This means that prices for dairy products have adjusted accordingly and our earnings have improved. Over the year we have, therefore, gradually been able to raise the price paid to our owners,” says Peder Tuborgh, Arla Foods’ CEO.

The current rise is strongly linked to Arla’s end-of-year profit.

”Arla’s profit target is DKK 1.2 billion, a target that we’ve had within our sights for the past year. Now that we’ve almost reached the end of 2010, we believe that we can achieve our target and, at the same time, increase the milk price.”

While a number of markets continue to suffer the consequences of the economic crisis, sales have been good in certain other Arla markets. Not only does this mean that capacity at the dairies is being well utilised, it also has a positive impact on the bottom line. Some non-recurring items such as foreign exchange factors have also played a part.

Although the current situation is positive, Peder Tuborgh believes that 2011 is expected to be more uncertain.

”As a result, we expect the market to see more fluctuations where we as a dairy company will have to react faster to both positive and negative changes in the market.”

Facts: Annual profits

• Arla’s Board of Directors has decided that Arla should post annual profits amounting to 2.5 per cent of the turnover, which this year equates to DKK 1.2 billion.
• At year end in March, the annual profits are appropriated by the Board of Representatives for consolidation and supplementary payment. In October, the Board of Representatives adopted a new profit distribution policy which means that 4.5 per cent of the Arla performance price is consolidated, with the remainder assigned for supplementary payment.