Arla Foods' Chairman is now ready to discuss the possibility of individual equity for the co-operative owners
At the meeting of the Board of Representatives this week, Knud Erik Jensen, Chairman of Arla Foods, opened up a debate which has smouldered among co-operative members for some considerable time.
"Now that we are co-operative shareholders of the same company, supply and consolidation are concentrated in one place,” said Knud Erik Jensen. “This has meant that from October 2003 we can establish members’ accounts or other types of individual equity that, in turn, will allow us to clarify one of the issues that has been debated within the Board of Representatives many times."
In his report, Knud Erik Jensen referred specifically to two significant events during the past year.
"First, the representatives gave their final stamp of approval to the merger and secondly, the EU agreed the so-called mid-way evaluation of the agricultural policy, the most important decision since the introduction of the milk quotas in 1984. This is set to have a crucial effect on milk producers’ finances for many years.”
The Chairman also mentioned the current efforts to harmonise activities within the field of organic products and the common pricing system and quality programme, The Arla Dairy Farm, which came into force on October 1, 2003.
The growth issue
In addition, Knud Erik Jensen elaborated on an issue that has been the focus of much debate at membership meetings, i.e. the company’s growth.
"Some have perceived the issue of growth as an objective in itself,” he said. “This is wrong. The objective is to achieve the highest possible milk price and one of the means to achieve this is the continued development of the business, including a continual increase in milk processing.”
As did Managing Director Jens Bigum, the Chairman emphasised that added value dairy products have not been subject to the same fluctuations as bulk products and that the processing strategy has clearly benefited earnings.
"As the EU reform will lead to a decline in the milk price, Arla Foods' investments aim at limiting such price falls. It’s important for the co-operative members to understand this. It is, however, difficult to explain that the milk price isn’t falling quite as much as it would have done otherwise. It would be easier if we could show that the milk price rose year on year," said Knud Erik Jensen.
A plan for the continuing debate on consolidation is now in place. According to Knud Erik Jensen, a final decision may be made at the meeting of the Board of Representatives in June 2004.
Arla Foods' Chairman Knud Erik Jensen, at the meeting of the Board of Representatives this week in Stockholm:
"The EU agreed the so-called mid-way evaluation of the agricultural policy, the most important decision since the introduction of the milk quotas in 1984. This is set to have a crucial effect on milk producers’ finances for many years".
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