The dairy co-operative said 29 organic farms contracts were being terminated while 23 farms that are part of the Arla Ko 3.0 concept, for which suppliers receive a premium for meeting higher standards for animal welfare and sustainability, were also being given notice.
The farms have been told they can no longer supply this type of milk after the end of their 12 month notice period. However, they can still supply conventional milk to Arla going forward.
Both organic and Arla Ko 3.0 concept are milks come at with a higher price point because they are more expensive to produce. Arla said as a co-operative its need to balance that supply and demand in order to be profitable for the whole cooperative.
“Unfortunately, many consumers are not prepared to pay the cost of organic milk products. We are doing this to balance supply and demand and to create the greatest possible value for all Arla members,” head of media relations, Arla Sweden, Max Wallenberg told Dairy Reporter.
“It is a tough decision. We fully understand that it affects farmers who have invested in organic for a long time, but we at Arla need to look at the whole picture for the entire cooperative. Sometimes we need to make tough decisions for farmers because it is necessary for the whole.”
He added that supply and demand for organic dairy is quite country-specific so this decision in Sweden is not necessarily a trend that is being reflected globally.
“Arla Foods is the world’s largest supplier of organic dairy and we continue to invest in that category,” he said.
Arla Foods recently revealed it is planning to invest more than €63 million to expand production of two of its best-selling products. The move will see the Scandinavian dairy giant increase production capacity for Skyr and cottage cheese.
