Dairy co-operative Arla will increase in its supplementary payment from 1 to 1.5 euro cent per kg milk as part of an updated retainment policy.
The new policy was proposed at Arla Foods’ Board of Representatives (BoR) meeting in October.
The move will see a higher supplementary payment paid to farmers of 1.5 EURc per kg of milk instead of the current 1.0 EURc per kg of milk.
This will now be paid out over two instalments - in September and March - Arla confirmed.
It said this would come into force provided the company achieved an annual net profit of at least 2.8% of revenue.
The dairy co-operative's new strategy will be announced on 3 November 2021.
The proposal was approved by the BoR with 156 votes in favour and 15 against.
Arla Foods Chairman Jan Toft Nørgaards welcomed the move: "We now have a solid policy in place that will... create predictability for our farmer owners, to support them in the investment decisions they will make in their farm businesses.”
The new policy will be in place until the end of 2026, the co-operative said.