Arla Foods Consolidated Annual Report 2021

129 Arla Foods Consolidated Annual Report 2021 / Environmental, social and governance (ESG) data / Notes Environmental figures 1.5 ANIMAL WELFARE Contents III ANIMAL WELFARE JOURNEY ON TRACK Animal welfare is a key priority for our farmer owners, and for Arla as a company. Arla is committed to reporting on the most important measures to describe and improve animal welfare. Our animal welfare KPIs include somatic cell count, which is a good indicator of disease and stress in cows, and four indicators connected to the physical appearance and well-being of cows. The indicators are body condition, cleanliness, mobility and injuries. These indicators were developed based on scientific research into the most common dairy cattle issues. Animal welfare on farm is externally audited at least once every three years by a world-leading quality assurance and audit firm, SGS, specialising in animal welfare. The percentage of audited farms was 37 per cent in 2021 corresponding to 3,337 audits.The results of the audit can trigger a follow-up audit either if there are major issues or if there are several minor issues. In case of repeated animal welfare breaches, Arla stops milk collection from the non-compliant farm, and in rare, extreme cases terminates the membership. During 2020, the audit process was upgraded and harmonised across all owner countries to ensure that auditors follow the same procedure and standards everywhere. Therefore, only 2021 data is reported. The average somatic cell count across Arla geographies fell by 2 per cent to 191 thousand cells/ml, the lowest level for more than five years. FOUR CORE ANIMAL WELFARE INDICATORS We measure the general wellbeing of the cows using four indicators developed based on scientific research into the most common dairy cattle issues. Cows with good body condition Fit cows have the perfect amount of fat reserve on their bodies: not too little and not too much. COWS WITH GOOD BODY CONDITION MOBILE COWS CLEAN COWS COWS WITHOUT INJURIES Clean cows have a lower risk of being infected by disease. Ratio calculated based on 3,337 ArlagårdenⓇ audits performed in 2021. Mobile cows walk without any problems, and have no pain in their legs and hooves. Cows without injuries An injury on a cow can be a lump, bump, ulcer or sore. ESG Table 1.5 Animal welfare indicators Somatic cell count (thousand cells/ml) Share of audited farmers with no major cleanliness issues Share of audited farmers with no major mobility issues Share of audited farmers with no major injury issues Share of audited farmers with no major issues related to body condition Accounting policies Somatic cell count (average): Somatic cells in milk are primarily white blood cells. An elevated level of somatic cells can indicate inflammation (mastitis) of the cow's udder, which causes the animal pain and stress, and also lowers milk quality. Arla monitors the somatic cell count (SCC) by analysing milk at bulk tank level each time milk is collected from the farms. Levels are continuously reported to safeguard milk quality. The figure reported is a weighted average of Arla's entire milk intake in a given year. The SCC count is received from several laboratories across owner countries. SCC above 300 reduces the milk price to the farmer, while an addition is given for SCC below 300. Audit on farms and animal-based indicators Animal welfare conditions on all Arla farms are regularly audited. An audit entails a thorough check-up of the herd and the farm from all relevant animal welfare perspectives. Audits include basic audits (performed every three years), spot checks, start-up visits, attention and special attention audits. Audited farmers are defined as the percentage of owners who received at least one audit in 2021. One owner could potentially receive more than one audit per year if the farmer owns more than one farm or if the farmer receives both a basic audit and a spot check audit. Follow-up audits are not included in the figure. 2021 2020 2019 2018 2017 191 194 196 198 194 98.4% 99.5% 100.0% 99.8% Animal-based indicators evaluated by auditors The KPIs reported in Table 1.5 relate to the share of audited farmers with no major issues reported within each category. When an auditor visits the farm, a sample of the herd is selected. The sample size varies with the herd size. The auditor scores the cows in the sample for the four core welfare indicators on a scale of 0-2, where O means no issues identified, 1 means minor issues and 2 means major issues. The results are reported to Arla. If the auditors find more than 5 per cent of the sampled cows too thin, more than 25 per cent too dirty, more than 15 per cent lame or more than 10 per cent injured, they report it as a major animal welfare incident to Arla. ATA Uncertainties and estimates The UK somatic cell count includes the somatic cell count for contract farmers as well as owners, however this has no significant impact on the total somatic cell count. Farms are audited every three years. A year-on-year comparison may therefore be affected due to the fact that it is not the same farms being audited every year.

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