Herd-Earned Success: How ARLA is engaging rural dairy farmers from pasture to production

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Over a century ago, the Industrial Revolution introduced a world of mass production. And the Technological Revolution connected everyone at a touch less than a decade ago. However, before the assembly line and smartphones brought people together, it was the soil that gave communities their first grounding.

The earliest farming villages were found in the rocky slope of Ain Ghazal, Jordan, over 10,000 years ago. Hubs such as Ain Ghazal were centered on lentils, wheat, barley, and vegetation. It was part of what was known as the Fertile Crescent; a region in the near East of modern-day Syria, Iraq, Lebanon, Jordan, and Israel. While this reformation propelled mankind to quit the nomadic life, the art of cultivation and cattle rearing are continually diminishing today.

The fields of labor have changed with an immense decline in agricultural services; the EU is expected to undergo a 28% decline in the workforce by 2030. Furthermore, the subsequent cost production is expected to go up 2.5% annually. Arla, a multi-billion dollar international cooperative, understands that they are building an industry that is more capital and service driven. The Scandinavian dairy giant’s connection to the international market started at the grassroots with farmers. Their farmers are not just producers, they are all a part of the company’s decision-making body and directors of the conglomerate.

Mark Boot
Vice President/Head of South East Asia
Arla Foods

Cooperative Democracies and Carbon Footprints
The farmers at Arla play the part of producer and proprietor; all products sold by Arla in Bangladesh come from Arla farmers who own a part of the company. Mark Boot emphasizes that he is a part of the cooperative, “Our 11,200 farmers span across seven countries. They are the foundation and the future of the company and share our commitment towards environmental practices. We are committed to sustainable farming practices, making sure that we reduce the impact we have on the environment.” Their sustainable practices started in 2014. The following year they had reduced their carbon footprint in comparison to 1990. “Reducing carbon emission is now also a part of our Food Growth Strategy 2020. We aim to reduce these emissions by at 30%. Moreover, Arla is about mutual learning. We have held over 500 workshops that teach methods to implement sustainable practices to reduce emissions. Simultaneously, we learn the best practices in dairy farming from our farmers and spread that across our conglomerate.” They strive towards a greener tomorrow and it is evident in their numbers; Arla has conducted 4,300 carbon assessments and 295 workshops on the efficient use of feed and energy in the UK, Sweden, and Denmark. “We have completed over 5,000 carbon assessments on the grounds to have the most in-depth understanding of reducing these emissions. The cooperative merger is the foundation of our success and best practices. Our farmers are from a similar background, cultures, and socioeconomic statuses. They are able to communicate and relate with each other.”

Peter Hallberg
Managing Director
Arla Foods Bangladesh

From Copenhagen to Kawasaki
Part of the company’s Good Growth 2020 strategy includes the larger ventures in South Asia. They have a presence in nine countries across the continents that include China, Japan, Singapore, and Malaysia. Peter Hallberg points out that Bangladesh is the ideal climate for investment, “Arla has been voted the best milk brand in Bangladesh for the last three years; this motivates us to ensure that consumer demands in the country are met.” Arla Foods is now strengthening their ties to the region with an increased presence in Indonesia. “Our joint venture with PT Indofood CBP Sukses Makmur Tbk (ICBP) is a major step towards integrating Arla into the market further. ICBP is one of the largest dairy players in the region and has over 40 products. They have 50 factories in key points of the country which allows for freshness and quality maintenance.” Like Arla Foods, ICBP also has a strong global presence, reaching over 60 countries across the globe.

These partnerships are a critical component of the Good Growth 2020 according to Mark, “Entering win-win partnerships is a crucial part of how we work to reach our goals. We have worked well with Starbucks, for example, and this will be a long-term partnership. The benefits are visible across Europe, the Middle East, and Northern Africa. We aim to sell 110 million beverages through this partnership this year.” The organization creates partnerships on a local context such as the one with McDonald’s in the UK. These are based on the initiatives that make the most business and Arla has a supply chain that can provide support. “Formulating the strategy was centered around key themes to drive and grow our business. We have identified eight categories that include milk and powder, mozzarella, cheese and of course milk-based beverages. We also decided to work on a more unified Arla; one that speaks the same language conducts itself in the same system, and regulates under the same set of values.” Southeast Asia is a natural area for growth as the third largest dairy region in the world. “We strive to build strong brand value with companies such as Dano in Bangladesh. This is evident in our global partnerships with Premium Castello and Lurpak.”

The Ca+ Stance: Enriching the Organization
It’s all about putting every joint to the best of use at Arla. They have introduced what is known as the calcium transformation program. Mark observes that the company is working on embodying the nutrient they deliver best: “Calcium is a source of power. We want to work like the nutrient we provide best. Arla wants to work on eliminating complexities from its company; this includes fewer decision layers and more empowerment, and simplicity.” Calcium is a three-year transformation program that was announced in early 2018. The company’s management plans to reduce cost by €400 million, to give even more money back to its farmers and to begin investing in new opportunities for good growth. “This year alone we expect to reduce cost by at least €50 million. I am going to use strawberries to elaborate; we have 28 providers to meet the demands for yogurt production. The small amount of products we receive from each one creates a complexity that can be solved if we streamline the suppliers.” Arla intends to direct €300 million towards farmer-owners via prepaid milk prices and reinvest the rest in strategic growth. This year is also momentous because their operations are expected to reach €10.5 billion in revenue.Moreover, they expect the branded sales to grow by 3% by the end of the year. “When you work so closely with the farmers, you appreciate their very nimble and humble mindset. Every euro they are investing counts heavily. We want them to always have a profitable enterprise in their partnership with us.” 

“We focus on giving them the best possible milk price. The most frustrating matter for a farmer is ramping up their production and not being able to sell it.” They utilize a follow-up mechanism that enables farmers to identify profit margins and the rate at which they can expand. “Identifying the capacity of each farmer factoring in their land, barn size, number of cattle, feed and hygiene is the first step of our evaluation. We then look at how they can maximize productivity. Simultaneously, we teach methods for a more quality product; one that has more fat and protein and a lower bacteria count. Our farmers follow an animal welfare program that allows them to understand this better through training.”

Farm-iliarity: Understanding the Field through Research
One trait is unanimous at Arla – innovation. They apply the best and most up-to-date practices on the field and in the field (of research anyway). Mark explains that research is a prerequisite for the next step, “Milk is such a diverse product. We grant university studies, and research corporations, and partnerships to see what can be done to improve the quality and obtain new products. One such innovative product is Protino. The protein supplement comes in the form of drinks and desserts, providing nutrient without sacrificing taste. “When we launched Protino, we worked very closely with universities and hospitals demonstrating that it was an easy way of providing nutrients. Every situation is different; so sometimes you fund research to understand the situation or nutritional needs and based on that device a product. It’s not always ‘we need a product’, but it has to lead to something which creates value for the farmers because ultimately it leads back to the milk.”

Arla recently opened a brand new, state-of-the-art Innovation Centre in the heart of the Danish Food Cluster. From here, the company works closely with open innovation together with scientists, retail customers, farmers, and consumers to identify and develop the dairy products of the future for consumers around the world. “The beauty of research is that it also brings forth solutions to pressing matters,” highlights Peter. A recent study has shown that milk prevents the level of stunting. “A recent study has shown that 43% of children under five are stunted according to the World Bank. This is more prevalent in rural areas where one out of two face stunting. The research has concluded that milk intake is one of the primary preventative methods.” The International Food Policy Research Institute concludes that milk intake can reduce stunting by as much as 10.4 points within the first 1,000 days. Peter believes that Arla can play an important presence towards a solution: “Arla has been in Bangladesh for 57 years. We have an obligation to support the local milk and farming industry. It is no longer about exploring the opportunities our company has in Bangladesh. Scaling our reach and long-term relationships in Bangladesh begin with contributing.”

WASTE IS TURNED INTO AN ASSET

Arla farmer Hans Clausen successfully recycles what was once considered waste

Since 2013 Hans has participated in the Arla sustainable dairy farming programme. In 2013 and again in 2015 he carried out a carbon assessment, offered free of charge by Arla.
The first one, back in 2013, was prompted by pure curiosity from Hans:
“It was free so I thought I might as well take part. It can only be an advantage if I can get to compare my farm with others for nothing, the assessment provided me with that opportunity.”
In the on-farm assessment, trained consultant goes through the farm systematically to identify key areas for the farmer to improve sustainability and cut costs at the same time. “This really made a difference to my business.”

Hans Clausen
Broager, Denmark

Energy-savings through LED lighting
The 2013 climate assessment showed that Hans was using more than average amounts of energy. This prompted him to reduce his electricity consumption by installing LED lighting throughout his farm.

2015 follow up assessment clearly demonstrated that this had been an effective measure on Hans’ farm.

The milk provides farm house heating
Another energy-saving change Hans has made is to recycle the warm air generated when the fresh milk from the cow is cooled down from 37 °C to 4 °C. Hans’s herd produce about 1 million liters of milk per year, all of which is stored in the farm’s milk tank before it is picked up by the Arla milk tanker.

By installing a pump in the milk tank, Hans now recycles the heat from the milk, which is then utilized in the underfloor heating in the farmhouse. Again a clear win-win.

Efficient feed production
The carbon assessment also found that Hans produces a large proportion of high-quality homegrown feed which again, contributes to the efficient use of the resources on the farm. Hans is now looking forward to doing his third assessment through the Arla-programme:

“The more improvements you are able to identify and implement through an Arla carbon assessment, the healthier your finances get. Sustainability and financial benefits are well interlinked.”

SUSTAINABILITY COMES NATURALLY

Arla farmers Maurice and Zoe Davey continuously decrease their farm’s carbon footprint through good farm management
Zoe and Maurice Davey
East Kimber Farm
Devon, United Kingdom

Zoe and Maurice got involved with carbon footprinting almost by accident. Zoe explains, “I was at a meeting where Arla offered the voluntary carbon assessment to us owner-farmers. We have always been interested in alternative renewable technologies and been aware of the energy we use on the farm. It just was a point of interest.” Zoe and Maurice participated in Arla’s carbon assessment in 2014, 2015 and 2016. The last one showed improvements on the previous tests. Arla encourages its owner farmers not only to do carbon assessments but also to repeat the assessments over time, to understand where the footprint has improved and to identify opportunities to further raise the bar. Reducing the carbon footprint from dairy farming is an essential part of Arla’s Sustainable Dairy Farming Strategy, and the dairy company has conducted many thousands of assessments amongst its owner-farmers.

Increased milk production improves sustainability
Almost half of a carbon footprint is from the animal’s digestion of feed, which means it is extremely important to make sure the individual cow is producing the highest amount of milk from the food she eats.

Animal welfare and the health of the cows are key to how much milk the individual cow produces and it ensures a more efficient utilization of the feed.

Maurice and Zoe’s herd of 116 milking cows are high yielding and, even their least productive animals peak at 40 liters per day.

Continuously improving health pays off
On their farm, Zoe and Maurice made a concerted effort to reduce animal lameness and minimize cases of mastitis, which has proved to be a great success. Zoe says, “We are now at a stage where only five mastitis cases required antibiotic treatment last year”.

Zoe and Maurice have no doubt that the care they give their animals results in higher milk yields. Another clear proof of this is their work in reducing calf mortality, which has reduced dramatically over the past 12 months.

The cows come first
Good farming has always meant better all-around efficiency. Maurice and Zoe have never been faced with having to make a choice between economics and sustainability.
“We’ve tried to be good farmers and the two things happen to have gone together.”

BIODIVERSITY IS A NATURAL PART OF THE LARGESCALE FARM

Organic Arla farmer Dr. Frank Paass of APZ-Agrar-Produkt in Ziegendorf, Germany has a passion for biodiversity.
Dr. Frank Paass
APZ-Agrar-Produkt
Ziegendorf, Germany

Positioned in the north of Germany Dr. Frank Paass’s farm, APZ-Agrar-Produkt is home to 320 dairy cows.
The dry, sandy soil on which the farm is located is actually not very productive but the size of the holding – 1100 hectares – and Frank’s expertise in crop composition enables him to feed his animals without importing anything other than protein and mineral supplements.

Biodiversity is improved through careful farming
In his daily work, Frank is very conscious about biodiversity and supports the nature of the dry, sandy soil by keeping a smaller herd of cows. This gives a less dense growth of grain in his fields, which, as Frank says, “gives light and space for the growth of other plants than grass and crops.”

The length of the grass matters
Frank is passionate about organic farming and biodiversity and at the same time runs an efficient and productive dairy farm. Biodiversity and efficiency are not opponents but sometimes brings about conflicting goals. An example of this kind of dilemma is grass length. Biodiversity levels are higher when the grass is either untrimmed or trimmed at a late stage to allow other plants to become established, Frank explains. However, as grass has the highest level of protein and energy when it is kept short, a late cut means more biodiversity but less energy in the cows’ fodder.
“It is a tough choice but I cannot risk my business just because it would be nice to look at some beautiful plants.”

Making room for nature
Instead Frank has set aside dedicated areas that are not cultivated or cultivated less intensively. At Frank’s farm, it is a 10-hectare patch of land that is only farmed minimally. This land is now home to a variety of rare grasses, herbage, and even some endangered species. Maintaining biodiversity around the farms is a priority to Arla’s farmer-owners as well as to the dairy cooperative. For more farmers to practice biodiversity, Frank feels it is essential to make people understand the accompanying effort and economic consequences for the farmer.
“I’m happy to do this. I want to contribute my part and to the benefit of biodiversity,” says Frank.

Farmer’s Story and Case Study from Arla Foods

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