Arla pledges profits to drought-hit farmers

31 August 2018

A dairy company has pledged to donate its entire 2018 profit to farmers whose businesses have been hit by droughts across Europe.

Arla Foods, a cooperative owned by more than 11,000 farmers in the UK, Sweden, Germany, Belgium, Luxembourg, the Netherlands and Denmark, said it expected the payout to be worth as much as £278m.

Jan Toft Nørgaard, Arla’s chairman, said: “As a farmer-owned dairy company, we care deeply about the livelihood of our farmers and we recognize that this summer’s drought in Europe has been extraordinary.

“We are proposing that extraordinary measures be taken in this situation, and the board is satisfied with the positive development of the company's balance sheet, which makes this proposal possible.” 

The company usually gives out part of its annual profit to its farmer-owners, but because its balance sheet had “improved significantly” over the last few years it is able to undertake the “extraordinary initiative while still maintaining our investment plans for the continued future growth of the company,” according to chief executive Peder Tuborgh.

At the start of August, UK environment secretary Michael Gove held an emergency drought summit for UK farmers, promising to do “whatever it takes” to help them maintain food supplies.

Weeks of hot, dry conditions caused problems such as crop failure and lack of food for livestock, which had forced farmers to eat into winter fodder reserves, according to the National Farmers’ Union (NFU). 

“The impacts of the dry and hot weather have been hugely challenging for many farms across the country, with many not seeing such weather in their lifetimes,” NFU president Minette Batters said.

In July, a report commissioned by Arla said the UK dairy industry would face a sharp rise in prices and shortages of products when Britain leaves the EU.

Impacts on the supply chain such as non-tariff trade barriers and labour shortages could lead to spiralling costs for dairy companies, the report by the London School of Economics found.

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