Dairy firm Arla proposes to pay out up to £280m profits to drought-stricken farmers

Margaret Vale with cows from her family's Oakalby dairy herd in Aldeby. Picture: Sonya Duncan Copyri

Margaret Vale with cows from her family's Oakalby dairy herd in Aldeby. Picture: Sonya Duncan Copyright: Archant 2017 - Credit: Sonya Duncan

A major dairy co-operative has proposed paying out its entire 2018 profits to farmers who struggled to feed their animals during the summer drought.

The sweltering, dry summer stopped grass growing in parched pastures, forcing many East Anglian livestock producers to buy extra feed and dip into stores usually reserved for the winter months.

In light of the 'tough financial situation' faced by its farmers – and the strength of its own balance sheet – the board of dairy firm Arla Foods said it is in the company's best interest for this year's entire net profit to be paid out to its members.

Arla, which is home to brands including Anchor and Cravendale, is a co-operative owned by 11,200 dairy farmers in the UK, Denmark, Sweden, Germany, Belgium, Luxembourg and the Netherlands.

The firm usually only pays part of its profit to farmers, but proposes to making an exception this year, when its annual profit is expected to be between 285m and 310m euros (£257.6m to £280.2m).

One of East Anglia's Arla dairy farmers – Margaret Vale, of ES Burroughs and Son at Oaklands Farm in Aldeby, near Beccles – said any financial help would be 'much appreciated' after a difficult summer for her family's Oakalby herd of British Friesians.

'We are a grassland herd so we expect the cows to be living on grass all summer, but from July 1 we were having to feed them silage in the field,' she said. 'So that has cost us a lot of money.

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'We have had to put a bit more concentrate in the feed as well to help them along. Since the rain, we are back to where we should be with the grass, but we have had to purchase another 25 acres of maize just to cover ourselves, so that is another cost.

'The wheat prices have gone up and all the ingredients for the winter feed have gone up, so it will cost more to feed the cows during the winter.

'The weather has affected the cows as well. They are not producing what they normally do, and we have had problems with one or two where they have lost calves because of the heat stress. It has been very difficult.'

Arla's proposal will be discussed at the next board meeting in October and, if approved, the money will be paid out in March 2019.

Chairman Jan Toft Norgaard said: 'As a farmer-owned dairy company, we care deeply about the livelihood of our farmers and we recognise that this summer's drought in Europe has been extraordinary.

'We are proposing that extraordinary measures be taken in this situation, and the board is satisfied with the positive development of the company's balance sheet, which makes this proposal possible.'