Denmark-based dairy concern Arla is to introduce structural changes to the company, bringing in bigger payments for large milk producers and making it easier for them to get out of their contracts.
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Arla, facing criticism over its producer prices, which have seen dozens of producers tear up their contracts in recent months, said the new compensation package for dairy farmers would be ready next year. A new logistics bonus to bigger producers, paid per kilo of milk delivered, will be introduced from 1 January.
Arla has faced calls to abandon its cooperative structure or allow foreign farmers to become members. The decision, announced late yesterday (31 October), from the company’s highest organ, consisting of 140 farmers and 10 Arla executives, is the company’s response to those demands.
“We are at a turning point which – if we behave wisely – gives us a unique chance to start a new chapter in Arla’s history. We will now start talking about how to modernise the corporate concern,” said Arla chairman Ove Moeberg. He added the company would stagnate if changes were not introduced.
Milk producers who want to quit Arla will have to give ten months’ notice rather than the current year and do not have to wait until contracts are renewed to announce their intention to quit.
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By GlobalData
