Farmer members of Danish dairy giant Arla Foods are set to become part-owners of the company’s UK arm.
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Arla said today (14 May) that some 11,000 farmers in Denmark, Sweden and the UK will join forces to buy a 7% stake in Arla Foods UK.
The announcement comes after discussions began late last year over revamping the company’s corporate structure.
Under the agreement, Arla Foods amba, the central co-operative owned by Danish and Swedish farmers, and Milk Partnership Ltd (MPL), a vehicle for the 1,600 UK farmers in the Arla Foods Milk Partnership (AFMP) will form a joint venture company. That firm will take the 7% stake in Arla Foods UK.
UK farmers, through MPL, had previously held just over 5% in Arla Foods UK plc before Arla Foods amba bought the business outright in 2007.
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By GlobalDataArla Foods UK CEO Peter Lauritzen said the agreement showed the company is “committed to strengthening its relationship with UK farmers”.
Jonathan Ovens, chairman of MPL and AFMP, welcomed the move. “The joint venture has given us the opportunity to join a family of farmer shareholders and to get closer to, and gain a greater understanding of, Arla’s UK business. We are buying into a good strong business and are excited about the company’s long-term strategic direction.”
The UK’s National Farmers Union said Arla had realised that, with milk in short supply, it needed to work closer with farmers.
“Arla producers in the UK represent a third of Arla Amba’s total business,” NFU dairy board chairman Gwyn Jones said.
“This announcement makes British farmers more than just shareholders in a company. For the first time farmers, through the AFMP will have a proper insight into Arla UK’s business, with a say in the long-term direction of the company. With milk in short supply it is clear that Arla has realised it can’t keep its farmers at arms length.”
