Arla, the farmer-owned dairy co-op, has announced it will pay all of the profits it makes in 2018 out to its co-op members in a bid to support farmers after a difficult year. Arla estimates its net profit for 2018 will be in the range of 2.8% to 3.2% of total group turnover.

If realised, this would equate to a sum in the region of €285m to €310m will be paid out to Arla members as an extraordinary payment, likely to be made in March 2019. Arla estimate the payment will equate to an additional 2.3c/l to 2.5/litre of milk for its farmer members.

Jan Toft Nørgaard, chair of Arla co-op, said the co-op was proposing these extraordinary measures in recognition of the drought which hit Europe this summer and left many of its farmer members in a very difficult financial situation.

Approval

The proposal is subject to approval by the board of representatives in the co-op, which is made up of 179 farmers and 12 employees of the co-op.

The amount of money that will be paid out to farmer members of the co-op will depend on the financial performance of the business for the remainder of 2018.

If approved, the extraordinary payment will follow the regular timing of the supplementary payment in Arla, with money being paid out in March 2019

“The amount of this payout remains subject to there being no material changes to the profit level or financial outlook at the end of the year.

"If approved, the extraordinary payment will follow the regular timing of the supplementary payment in Arla, with money being paid out in March 2019,” the co-op said in a statement.

Peter Tuborgh, chief executive of Arla, said the co-op’s strong balance sheet allows for this extraordinary support payment to be made to farmers. Arla is owned by 11,200 farmers in the UK, Denmark, Sweden, Germany, Belgium, Luxembourg and the Netherlands.