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Prospect of a fall in co-operative members’ earnings

Press Release   •   Oct 11, 2004 12:00 CEST

Arla Foods’ Supervisory Board has approved the Group’s 2004/05 budget with a milk price of 227 (Danish øre). The figure is 10 øre below the estimate for the recently closed 2003/04 financial year.

The Board also decided to keep the on account price unchanged and instead pay a lower supplementary payment for 2004/05. The on account price is the amount paid during the year to the co-operative owners.

“In view of the lower earnings which will affect Arla Foods’ co-operative owners, the Board decided not to cut the on account price now,” Knud Erik Jensen, Chairman of Arla Foods, said.

As a result of the unchanged on account price, Arla Foods’ result is expected to be significantly below last year’s.

Knud Erik Jensen

“The lower result level means that the Supervisory Board will monitor developments with the utmost care. We may be forced to carry out adjustments of the on account price later in the year,” Knud Erik Jensen said.

The difficult conditions for the co-operative owners have been caused by the EU reform which will mean that intervention prices for skimmed milk powder and butter are set to fall by 15 and 25% by 2008/09.

“We continue to work on our strategy plan with the aim of keeping Arla earnings per kg milk at around DKK 2.15 once the EU reform is fully implemented,” said Knud Erik Jensen.