Arla Foods is an international agricultural cooperative with headquarters in Viby, Denmark. As one of the largest dairy manufacturers in the world when based on sales and a 1.8 percent share of the global milk production market, Arla Foods was created as the result of a merger between the Swedish dairy cooperative Arla and the Danish dairy company MD Foods in 2000. Agricultural cooperatives were developed as a way to alleviate deficiencies in the structure of farms when operating as small independent entities; they are both associations of individual people and economic enterprises. They ensure efficiency in the whole supply chain by pooling resources and addressing each stage of the production and manufacturing process.
Currently, Arla Foods employs some 19 thousand people worldwide and is divided into three main business segments: Arla Europe, Arla International and Arla Foods Ingredients. Arla Europe serves the European market, while Arla International serves other regions around the world. The Arla Foods Ingredients division produces functional milk proteins, which are used in a range of bakery and dairy products, as well as whey-derived bioactive ingredients with uses in infant and sports nutrition and functional foods.
Milk prices have had a significant effect on dairy cooperatives around the world, particularly in Europe, as overproduction of milk has resulted in both unstable and lower farm-gate prices for raw milk. Compared to private dairies, cooperatives are unable to compensate for such variability and can threaten farmers' livelihoods by being unable to supply with them with a secure and sustainable income, given such a volatile market.
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