Arla Foods is to axe 250 jobs after deciding to make a number of structural changes to its global business in a bid to cut costs and “reduce complexity” within the organisation.

The dairy co-operative insisted it was producing “significant” growth in turnover but said it needs to cut annual costs by DKK500m (US$86m) to “keep up with international competitors”.

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Arla said its business will be organised in “a more efficient way”, to ensure a competitive milk price for its farmer owners and to “prepare the organisation for further growth”.

The company said it will discontinue around 250 administrative positions globally before the end of 2012, and around 150 administrative positions will restructured within the organisation.

Arla said it will also reduce its spend on market research and analysis activities in addition to procurement costs on packaging and other materials.

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“Our turnover is growing, and that growth will continue. We have a responsibility towards all of our cooperative owners and other dairy farmers, who invest their milk and their money in Arla, to make sure that our turnover grows significantly faster than our cost,” said Arla CEO Peder Tuburgh. “Our international competitors are able to turn ideas into action quicker than before and, therefore, Arla needs a more simple and structured way of working.”

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Arla said its management will continue to analyse the company’s global production set-up to “identify the potential for similar efficiency measures” within the production chain.

“I know that this is really bad news for the colleagues who may lose their jobs, and it is certainly no reflection on their performance,” said Tuborgh. “Each activity they have been responsible for makes sense when viewed separately, but we can’t afford everything. Therefore, we must now either discontinue the activities or organise them in a more efficient way.”