Dairy cooperative Arla has made the first monthly payment of incentives to its farmer owners for implementing sustainability measures on their farms.
The incentive depends on the individual farmers’ efforts, measured in points, using a data-driven and science-based system.
The amount is expected to increase as farmers, motivated by the incentive, make further climate improvements, the dairy giant added.
Last year, Arla announced its Sustainability Incentive model to reward farmers for implementing climate- and environment-enhancing initiatives.
Peder Tuborgh, CEO of Arla, stated, "The Sustainability Incentive is a large step towards linking economy and climate and nature improvements on farms. Arla’s unique point system makes it possible for us to reward our owners and thus contribute to their large investments in sustainability.
"At the same time, we strengthen the farmers’ motivation to implement the initiatives necessary for our cooperative to reach its ambitious climate goals for 2030."
In 2022, the co-operative's farmers across seven countries reduced their CO2 emissions from milk production by more than 2%, according to data from Arla’s Climate Check platform.
This has been achieved by using feed more efficiently, improving manure storage, reducing the use of fertiliser, energy consumption and shifting to more renewable sources of electricity.
The dairy giant expected farmers to achieve an average of 39 points out of 80 in its point system.
However, initial results show that the average farmer achieved 48 points based on the initiatives registered by the end of June 2023.
The 48 points mean that across seven countries Arla will pay an average of 1.44 eurocent per kilogram of milk to its farmer owners as incentive.
In addition, Arla will pay another 1 eurocent per kilogram of milk for submitting the Climate Check data required to benefit from the Sustainability Incentive.
For an average Arla farm with and annual milk production of 1.6 million kilograms, these two incentives amount to nearly €40,000 a year.
'Smaller Footprint On Climate And Nature'
Commenting on the initiative, Jan Toft Nørgaard, chair of the board at Arla Foods, said, "Our owners are working determinedly to reduce emissions on their farm.
"There is a great commitment in our cooperative to show our consumers, our industry and society in general that we as Arla farmers are able to produce milk with an increasingly smaller footprint on climate and nature."
The monthly incentive will be updated quarterly, and the total annual amount will depend on the farmers maintaining the level of sustainability initiatives on each farm, as well as the total milk volume supplied to Arla.