LONDON Jan 6 Dairy cooperative Arla Foods
has nearly doubled the number of British farmers that
are owners in its business as the company works to raise sales
in international markets like Africa and China, where demand for
dairy products is growing.
European farmers are particularly keen to access those
markets, since the European dairy industry will see an end to
production quotas in 2015. The change is expected to flood the
market with new milk that could push down prices.
"That's why we're being so successful in attracting new milk
at the moment, because farmers are looking to the future and
realising that Arla is a good long-term bet," Ash Amirahmadi,
the company's head of milk, told Reuters.
Arla will announce on Monday that it has added 1,300
farmer/owners in Britain, where it sells leading brands such as
Anchor butter and Cravendale milk. That brings its total to
2,800 farmers in Britain, about 3,000 in Denmark, just over
3,000 in Sweden, about 2,000 in Germany, about 500 in Belgium
and 200 in Luxembourg.
"The key question for a dairy farmer is, post-2015, what is
my plan for where my milk is marketed. If my current milk buyer
doesn't have access to these local markets, or hasn't got the
ability to convert my milk into more premium dairy products,
then I am at risk," Amirahmadi said.
Arla is opening up registration again this month to recruit
more farmers' milk into its supply pool, Amirahmadi said.
GROWING IN CHINA, AFRICA
In China, whose infant formula market is set to double to
$25 billion by 2017, Arla has "massively benefited" from a
desire among milk powder buyers to diversify away from Fonterra
following this year's drought in New Zealand and a food
"That's not something that we rejoice in, but definitely the
major buyers of Chinese commodity products have wanted to spread
their risk a bit more," Amirahmadi said, noting that Arla
already has a venture with China Mengniu Dairy.
"When you've already got a stake in a Chinese business and
you've already got the access to the market, clearly they didn't
have to look very far to find another willing supplier," he
said, declining to provide specific sales figures.
Arla Foods, with annual turnover of more than 2 billion
pounds ($3.3 billion), generates three-quarters of its sales
from Europe, and the rest from international markets such as
China, Africa and the Middle East. It is working to double the
size of its international business.
In Africa, Arla runs a mobile factory the size of a shipping
container that processes bulk milk powder, fortified with
vitamins A and D, into individual 7-gram sachets that are
distributed by local vendors.
"We literally cannot make enough at the moment in terms of
the demand," Amirahmadi said.