Arla Foods offers more UK farmers co-ownership
The Arla Foods amba Board of Directors, and the board of Milk Partnership Limited, Arla Foods Milk Partnership’s (AFMP) investment company of which all AFMP farmers are members, have a proposal that could see a further 1,600 British dairy farmers become co-owners of Arla Foods amba, one of Europe’s largest dairy co-operatives. At the same time, the boards have announced positive changes to the Arla Milk Link merger conditions. The two proposals, which further strengthen Arla’s cooperative status in the UK, could raise the number of British dairy farmer owners to 3,200.
With effect from 1 January 2014, Arla Milk Link members will receive Arla Foods amba’s supplementary (13th) payment, two years ahead of schedule. The first payment will be received early in 2015 on milk supplied during 2014. The supplementary (13th) payment is an additional annual payment of the global company’s profit, paid out on a pence per litre basis, after the year end, usually in March.
Johnnie Russell, director of Arla Milk Link and Arla Foods amba, says: “This is an extremely important milestone for the development of Arla’s business in the UK. The original agreement with Milk Link, which allowed for a three and a half year transition period to full membership, was negotiated on the basis of a historic performance price gap that does not currently exist, given the strong business performance in the UK since the merger in 2012.”
Milk Partnership Limited (MPL) will become a corporate member and co-owner of Arla Foods amba, with effect from 1 January 2014, with farmers who elect to join receiving the same membership rights as the existing 12,250 farmer owners, including Arla Milk Link farmers. All existing suppliers of AFMP, Arla direct, and Arla Milk Link direct will be invited to take up the offer of ownership. AFMP farmers not wishing to take up the offer will have the option to transfer to an Arla direct contract.
From 1 January 2014, MPL farmers will receive the Arla Foods performance price, which includes the amba standard litre price, plus a supplementary (13th) payment, and will benefit from individual consolidation and collective (common) consolidation.
Speaking about the proposal, Jonathan Ovens, chairman of MPL and AFMP, notes: “One of the founding principles of AFMP was to secure a home for every litre of members’ milk and we are delivering on this aim. I’m delighted that we have agreed the terms of the roadmap which offer circa 1,600 farmers the benefit of joining a major European cooperative that consistently pays one of the highest milk prices and a share of the profits. This move takes our ambition to the next level by providing the security of a milk price determined by European and world markets, from a well-balanced, well-invested, farmer-owned business, which has access to the global marketplace and operates across all dairy categories.
MPL members will receive a detailed information pack and a series of roadshows is being held across the country to enable them to learn more about the proposals and the benefits. Both proposals require the approval of Arla Foods amba’s board of representatives on 9/10 October. MPL members will vote for MPL to become a cooperative at an all-member meeting on 30 October. Current Arla farmers have until 15 November to confirm their intention. Should the offer be undersubscribed, it will be opened up to British dairy farmers, who currently do not supply Arla Foods, who are invited to register their interest with Arla Foods UK.
