Arla Foods Consolidated Annual Report 2021
6
Arla Foods Consolidated Annual Report 2021 / Mangement review / Chairman letter
CREATING THE FUTURE OF DAIRY
FROM THE GROUND UP
Contents
In 2021, both on-farm and company operations
were heavily impacted by the continued effects
of the Covid-19 pandemic and rapidly rising
production costs. Yet thanks to the dedicated
efforts of farmers, employees and management,
Arla successfully navigated this challenging
environment to deliver strong performance while
making key progress on our sustainability journey.
In volatile market conditions, Arla's brands continued
their strong growth trajectory, gaining ground in a
number of important markets to reach a strategic
branded volume growth of 4.5 per cent - on top
of unprecedented growth in 2020. Combined with
continued efficiency gains across the supply chain
and rising commodity prices, this meant we were
able to deliver our farmer owners a competitive
performance price of 39.7 EUR-cent/kg. While this
represents an increase from 36.5 EUR-cent/kg in
2020, it is also a necessary development as our
farmer owners have been under intense pressure
from the sharp price increases on labour, feed,
energy and other commodities.
New strategy
Building on our strong financial and commercial
position, we launched our Future26 strategy
in 2021, cementing our commitment to
sustainable dairy production and growing the
business responsibly. While global demand for
dairy is growing, so too are expectations from
consumers. This requires investments, both
within the company and for our owners, whose
farming practices are more important than
ever. For them to continue and accelerate their
sustainability efforts, and future-proofing their
business, we must secure the highest value
for their milk. This ambition is reflected both in
our target to deliver a competitive milk price
and our new retainment policy, which means
that we will return more of the annual profit to
our farmer owners in the coming years - from
previously 1.0 EUR-cent/kg milk to a guaranteed
1.5 EUR-cent/kg. Over the strategy's five-year span
this will amount to a supplementary payment of
more than EUR 1 billion.
Accelerating sustainability efforts
Conducting the second round of Climate Checks in
2021 was an important step on our sustainability
journey. Confirming that Arla's farmers are among
the most climate-efficient in the world, detailed
data from almost 8,000 farmer owners provides us
with a unique tool to guide efforts and measure our
progress in the coming years, collectively as well as
on the individual farm. The continued efforts of our
farmers, our participation in research projects and
piloting new technology and innovative farming
methods give us a strong setup to accelerate
improvements.
Combined with continued
efficiency gains across the supply
chain and rising commodity prices,
we were able to deliver our farmer
owners a competitive performance
price of 39.7 EUR-cent/kg. 99
Building on our unique strengths as a farmer-
owned cooperative and optimising our democracy
was another key priority in 2021. Through the
Coop 2.0 initiative, our owners have shown great
engagement in dialogues about the future of
our cooperative, how to improve our democratic
processes and member engagement and ways for
us to best work together as we create the future
of dairy.
Jan Toft Norgaard
Chairman of the Board of Directors
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