Arla Foods Looks to Expand UK Ownership
Arla’s Board of Directors is proposing that the British supplier group, Arla Foods Milk Partnership (AFMP), through its investment arm Milk Partnership, should become co-owners of Arla Foods from 1 January 2014. The aim is to strengthen the dairy co-operative further. Arla’s Board of Representatives will make its decision in October.
From 1 January 2014, the co-operative dairy company, Arla Foods, is set to grow by circa 1,600 British dairy farmers. As a result, Arla will have almost 14,000 owners in Denmark, Sweden, UK, Germany, Belgium and Luxembourg.
Arla Foods Milk Partnership (AFMP), the supplier group, already supplies milk to Arla in the UK, and the group owns part of Arla’s UK business. Arla and AFMP announced in the spring that negotiations concerning co-ownership were already underway.
“Over the years, we’ve enjoyed a good partnership with AFMP, and in the past five-six years, AFMP has not only expressed its wish for co-ownership, but has also demonstrated a clear will to be owners with all that this entails. The members of Arla’s Board of Directors are convinced that having AFMP as part of the owner group will strengthen Arla considerably,” says Ake Hantoft, chairman of Arla Foods.
It will cost an AFMP farmer 7.5 pence per litre of supplied milk to gain access to Arla (paid over two years).
“They are ready to make the investment,” adds Ake Hantoft. “This is because fundamentally, Arla and AFMP share the same view of the future: we believe that, as dairy farmers, a growing farmer-owned cooperative can give us the greatest security going forward.”
Chairman of AFMP, Jonathan Ovens comments: ”The offer presents us with an unrivalled opportunity to become an owner of Europe’s largest, and most progressive, farmer-owned dairy cooperative. Arla Foods amba’s mission is to secure the highest possible value for its farmers’ milk, while creating opportunities for their growth. The company’s track record and determination to continue to develop on the global stage leaves me in no doubt that this mission lives and breathes within Arla. Quite simply Arla Foods amba is a business owned by farmers for the benefit of farmers. There is natural alignment of our interests as UK dairy farmers with the existing dairy farmers who own Arla Foods amba.”
“Initially, Arla’s annual milk supply may not be any larger as Arla already buys AFMP farmers’ milk. But the agreement will increase Arla’s stability and opportunities in the UK market and this is important,” says Peder Tuborgh, chief executive of Arla Foods.
”Arla’s strategy is based on growth and the road to growth is more milk. We need milk to continue to meet our customers’ requirements, grow with them and be efficient. All this is a prerequisite in order for us to be a stable partner for our owners and pay them a strong milk price. A stable raw milk supply is crucial for creating growth and profitability: this applies not only to Arla in the UK, but to the whole company,” adds Peder Tuborgh.
