Arla seeks key European trade assurances

Arla's dairy plant in Stourton, Leeds.
Arla's dairy plant in Stourton, Leeds.
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Yorkshire’s largest dairy processor, Arla, has urged the Government to protect British dairy farming as it embarks on formal negotiations over Britain’s exit from the European Union.

The farmer-owned cooperative, whose UK headquarters are in Leeds, warned that the contribution made by its business and farmer owners to the economy would come under “severe pressure” if Brexit negotiations lead to significant restrictions on free trade and quotas.

A new analysis of the company’s economic contribution to the economy, found that Yorkshire is the standout region for Arla’s Gross Value Added (GVA) contributions across the UK.

Arla runs a dairy processing plant, transport hub and national distribution centre at Stourton, Leeds, and its Yorkshire operations generated some £313m in GVA in 2014 - the equivalent to 0.5 per cent of the region’s economy.

That figure has the potential to rise further still, with the company unveiling £5m plans at the start of the year to open a new packing facility at Stourton as it looks to increase production of its own-label flavoured milk.

Arla said it was investing approximately £37.5m across 13 UK sites as part of its new global investment programme, but the benefits risk being undermined by a raw deal from the Government’s Brexit negotiations.

In 2016, Arla exported to 21 countries within the EU and 48 outside of it.

Tomas Pietrangeli, managing director of Arla Foods UK, said: “While it’s true that Brexit will bring opportunities that we are ready to embrace, ending tariff-free trade should be seen as a major risk.

“We need assurances that the transitional arrangements we are likely to require before a free trade agreement between the UK and the EU is agreed are tariff- and barrier-free. To do otherwise will be detrimental not only to us but to many other organisations.

“That’s why we’re calling on Government to protect the health of the British dairy industry and its broader benefits to the wider UK economy and, in doing so, ensuring agriculture and food and drink production are front and centre of its negotiation efforts.”

Oliver Hogan, director at the Centre for Economics and Business Research (Cebr) which analysed Arla’s economy value to the economy, added: “The true extent of Arla’s economic ‘footprint’ in the UK cannot be underestimated. It’s a business that is deeply embedded in the British economy, not only through its farmer owners and core dairy business, but also through a large and wide-ranging domestic supply chain and through its downstream links with the distributive trades.”

The UK dairy industry accounts for around 18 per cent of UK agricultural production by value. Arla farmer owner, David Christensen, a member of Arla amba’s board of representatives, warned: “The triggering of Article 50 has fired the starting gun to the Brexit negotiations and it is important that British dairy is not left behind.”

IN NUMBERS

According to Cebr’s report, Arla’s total economic footprint in the UK is worth 0.52 per cent of the entire UK business economy.

It found that for every £1 of GVA generated by Arla’s dairy business in the UK, another £14.91 is stimulated in its supply chain and in the wider economy.

The report also concludes that the combined businesses of Arla and its farmer owners directly supports more than 50,000 jobs in the UK and can be indirectly associated with more than 119,000 jobs in total - which equates to a 0.51 per cent share of employment in the whole of the UK’s business economy.

The farmer-owned company recorded a UK revenue of €2.53bn last year.

Besides the Arla brand, the company produces other well-known brands including Anchor, Castello, Cravendale and Lurpak,

In total, Arla is responsible for almost a third - 29.4 per cent - of the entire UK dairy manufacturing industry.