The company could spend 3.7 billion kroner per year rewarding its most climate-efficient suppliers, media Finans reports.
The measure is one of a number Arla plans to take to reduce its CO2 emissions and would make it the first dairy company in the world to implement a climate plan of this nature, according to Finans.
The plan would give the company several commercial opportunities, its CEO Peder Tuborgh told the media.
Milk will become more expensive for consumers in future but demand for sustainable products will increase, according to Tuborgh.
“This plan ensures that we fulfil our goal of reducing emissions of greenhouse gases from farms and by a further 30 percent by 2030. But the plan also provides a lot of commercial opportunities for Arla and makes financial sense for our shareholders,” he said.
Under the proposal, cash rewards would be given to milk farmers as part of a point system. The most sustainable producers would score up to 100 points, which would give them up to 30 øre (0.3 kroner) more in payment per litre of milk.
Milk producers are positive about the plan according to Kjartan Poulsen, head of the national milk producers’ union, Landsforeningen af Danske Mælkeproducenter.
But it will not work unless consumers must be willing to pay more for milk, Poulsen warned.
“This must not end up as a plan that just moves a lot of money around between farms. A precondition for all of this is that customers want to pay what these efforts cost. Otherwise it won’t last for long,” he said.
The plan was scheduled to be presented by Arla on Friday. The Danish dairy firm is owned by over 9,000 Danish and foreign milk producers.