The model is based on a system where participating farmers earn points against a criteria of on-farm activities.
From 2027, Arla will expand the scheme with six new action areas, covering forage, manure treatment, biofuels, low-carbon fertiliser, reduced methane from grazing cows and breeding.
In 2027, the FarmAhead Incentive will increase from 84 to 111 available points and increase the value of each point from EUR-cent 0.03 to EUR-cent 0.04 per kilo of milk.
It will also adjust points and thresholds for existing actions, including feed efficiency, fertiliser use, protein efficiency and grazing.
Arla said the incentive puts a financial incentive worth up to EUR 550m annually behind actions scientifically linked to reducing emissions.
The cooperative said that by giving farmer owners more ways to earn points and increasing the financial value of each point it aims to accelerate actions that reduce the climate impact of milk production on farm.
Arla farmer owners have already reduced their absolute emissions from raw milk production by 1.2m tons CO2e since 2020.
“With FarmAhead Incentive, we link actions to reduce the climate impact of milk production on farm directly with the milk price paid to our farmers. That is a powerful way for a farmer-owned cooperative to drive change,” said Hanne Søndergaard, Executive Vice President, Agriculture, Sustainability and Communication at Arla Foods.
“Now we are taking our biggest step forward since launch, providing more ways for farmers to act and ensuring a higher reward for every point they earn. Our ambition is clear: to turn new technology and knowledge into practical action on farms and accelerate emissions reductions.”
Jan Toft Nørgaard, Chair of Arla Foods added: “Our farmer owners have already taken important steps to reduce emissions. We want to make sure there is a next step for them to take, including those already earning maximum points in parts of the model. Farms differ, and so do the opportunities to take action to reduce emissions. With this update, we are giving more farmers more options to move forward in ways that fit their farms. ”
Arla said that since the launch of the model in 2023, Arla’s farmer owners have increased their average incentive score by six points.
The news comes as Arla Sweden revealed it had axed contracts with 52 farms as the demand for organic milk fell in the country.
