Rising fuel prices, including a DKK 2.03 increase per litre for diesel, are now having a marked effect on Arla Foods’ transport budget. Collection and inter-dairy transport alone is now accounting for a cost increase of 0.66 øre per kg milk.
As tankers used for milk collection and inter-dairy transport currently cover approximately 33 million km per year – at 2.5 km per litre diesel - rising fuel costs have so far added DKK 27 million per year to the Membership Division's fuel bill.
"Up to now we have managed to balance the price rises through cost efficiency measures," explains Director of Transport, Jørgen Lyngsø. "However, prices have now escalated to a point where they cannot be ignored. Consequently, we're likely to have to adjust next year's budget accordingly."
In other areas, too, rising fuel prices are making an impact. As Arla Foods’ fleet of company cars covers 7.3 million km annually, rising fuel prices have led to significant extra costs.
The same is the case within Arla Distribution which has seen extra costs of DKK 4.2 million for the first 11 periods of the year. This is likely to rise to DKK 6 million for the full year.
In Sweden, calculations during the summer show that price rises for the previous six months amounted to SEK 10 million. Since then further increases have taken place.
In the UK, Arla Foods did not suffer any great incovenience from the blockade of the fuel depots owing to its considerable fuel stocks.