Danish dairy giant wants to reward climate-friendly producers

Arla, Denmark’s largest dairy company and a major exporter, wants to reward farmers for low emissions under a new climate policy.

Danish dairy giant wants to reward climate-friendly producers
Danish dairy Arla wants to reward farmers for green production. File photo: Henning Bagger/Ritzau Scanpix

The company could spend 3.7 billion kroner per year rewarding its most climate-efficient suppliers, media Finans reports.

The measure is one of a number Arla plans to take to reduce its CO2 emissions and would make it the first dairy company in the world to implement a climate plan of this nature, according to Finans.

The plan would give the company several commercial opportunities, its CEO Peder Tuborgh told the media.

Milk will become more expensive for consumers in future but demand for sustainable products will increase, according to Tuborgh.

“This plan ensures that we fulfil our goal of reducing emissions of greenhouse gases from farms and by a further 30 percent by 2030. But the plan also provides a lot of commercial opportunities for Arla and makes financial sense for our shareholders,” he said.

Under the proposal, cash rewards would be given to milk farmers as part of a point system. The most sustainable producers would score up to 100 points, which would give them up to 30 øre (0.3 kroner) more in payment per litre of milk.

Milk producers are positive about the plan according to Kjartan Poulsen, head of the national milk producers’ union, Landsforeningen af Danske Mælkeproducenter.

But it will not work unless consumers must be willing to pay more for milk, Poulsen warned.

“This must not end up as a plan that just moves a lot of money around between farms. A precondition for all of this is that customers want to pay what these efforts cost. Otherwise it won’t last for long,” he said.

The plan was scheduled to be presented by Arla on Friday. The Danish dairy firm is owned by over 9,000 Danish and foreign milk producers.

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Danish agricultural sector softens stance on emissions tax 

After years of firm opposition to any carbon tax on agriculture, the Danish Agriculture & Food Council (Landbrug & Fødevarer) interest organisation is changing tact on a likely tax on CO2 emissions in the sector.

Danish agricultural sector softens stance on emissions tax 

The organisation is to shift strategy from strongly opposing the tax to participating “constructively within negotiations” on a green agricultural tax reform, newspaper Berlingske reports. 

Despite the organisation’s change in stance, its chairperson Søren Søndergaard said he still maintains that taxing agriculture based on CO2 emissions is not sensible climate politics.

“But there has now been an election and there are [ongoing] negotiations to form a government. We can see that the parties that are close to the negotiations all want a CO2 tax on agriculture,” he told Berlingske.

The Danish Agriculture & Food Council (DAFC) therefore wants a seat at the table when the rules –which it accepts are coming — are set.

It has proposed five principles for reform. According to Berlingske, the principles strongly resemble the organisation’s longstanding arguments against a CO2 tax.

READ ALSO: Denmark proposes uniform CO2 tax for most businesses

Among its principles, DAFC wants to retain the 2021 reduction targets at 5 million tonnes of CO2 per year by 2030. Politicians are considered likely to push for a more ambitious schedule.

Other items on the organisation’s wishlist are measures to protect competitiveness and relocation of jobs; and a promise that funds collected from a CO2 tax will be reinvested in the food industry. It also wants incentives for farmers and companies.

The Liberal (Venstre) party, which could be part of a future government, was previously against the CO2 tax but has also changed its position.

“You can argue against a tax but you will not win,” Liberal leader Jakob Ellemann-Jensen told Danish Agriculture & Food Council representative earlier this month.

“It will happen, because there is a majority behind it,” he said.