Arla terminates contracts with 29 organic dairy farms and 23 Arla Ko farms in Sweden to balance supply and demand.
According to Arla, retail demand for organic milk in Sweden has fallen by 60% since 2016, while demand from foodservice customers, including restaurants and the public sector, has declined by more than 20%.
As a result, Arla Foods has announced that it will terminate contracts with 29 organic dairy farms and 23 farms participating in its Arla Ko programme in Sweden. The decision reflects declining demand for organic dairy products and the need to balance milk supply with market demand.
“Unfortunately, many consumers are not prepared to pay the price of organic dairy products. We are taking this action to balance supply and demand and create the greatest possible value for all Arla members,” Max Wallenberg, Head of Press at Arla Sweden, told the Swedish agricultural publication Husdjur.
Organic farms affected nationwide
The 29 affected organic farms are located across Sweden and were selected based on geographical and logistical considerations. According to Arla, their milk has not been used in organic production for some time but has instead been processed alongside conventional milk.
Arla currently has approximately 240 organic dairy farms in Sweden. The 29 farms account for around 8% of its organic milk supply.
The affected producers will continue receiving organic milk premiums during a 12-month notice period. Afterwards, they may continue supplying Arla as conventional milk producers.
“We fully understand that this affects farmers who have invested in organic production over many years. However, Arla must consider the interests of the cooperative as a whole,” Wallenberg explains.
The decision applies exclusively to Sweden. Organic dairy demand differs across European markets, with Arla reporting growth in Germany and signs of recovery in the UK.
Despite launching new organic products, updated packaging designs and marketing campaigns, Arla acknowledges that these initiatives have not been sufficient to reverse the decline in Swedish demand.
Arla Ko contracts also terminated
In addition, Arla has terminated contracts with 23 farms participating in its Arla Ko programme, which offers additional payments to producers meeting higher animal welfare and sustainability standards.
“We are terminating these contracts for the same reason: we have too much raw material,” Wallenberg says.
The affected Arla Ko farms are also distributed across Sweden. According to Wallenberg, many have significantly increased their milk production, and the farms account for 23% of Arla’s total milk volume.
Source: Husdjur