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Owners’ financial position impacts on Arla

Press Release   •   Oct 15, 2004 15:00 CEST

In a co-operatively owned company like Arla Foods, the members’ financial situation is closely linked to that of the company. If members’ earnings fall, this also impacts negatively on the company, says Group Managing Director Åke Modig.

The decision to downgrade the result and thus the supplementary payment means that the on account price will remain unchanged until further notice, although Arla’s earnings per kg milk received will be 10 øre lower in the new financial year. As the margins become smaller, the decision will increase pressure on the company.

“We have received a clear message from the members that they cannot accept any more at a time when the farms are experiencing such liquidity problems,” says Managing Director Åke Modig.

“Arla Foods is clearly affected by the fact that the milk price paid to the farmer is now very near the production costs for milk”, says Åke Modig.

“All parts of the company must contribute to increasing profitability and there must be more focus on added value production. Also, a determined effort must be made to identify cost saving measures.

“Now that the members are putting pressure on the company, there is a risk that the strategy will come under pressure, so we’ll be tempted to look for quick, cost-led solutions.

Maintaining our future strategy will be a challenge,” says Åke Modig.