Arla said the market was increasingly willing to pay a price premium for milk produced without GM feed and that it was in a ‘favourable position to capture this new opportunity’.
The decision follows a move in Germany where retailer demand for ‘GM-free dairy’ has increased.
As the commercial opportunities arise in other markets Arla is expected to invite other farmers to participate.
Arla Foods chairman Ake Hantoft said: “We have the biggest organic milk pool in the world, for which the feed is by default GM-free.
“Our Swedish farmers have always used GM-free feed. This means that around 20 per cent of Arla’s milk pool already meets this market demand.
“There is commercial potential in this that we can capture and build on immediately by attracting more farmers who are willing to convert to GM-free feed.”
Mr Hantoft said the decision was based on the commercial opportunity and reiterated it was not indicative of Arla owners’ stance on GM.
“We welcome innovative solutions and new technology, which can improve farming and help feed the world’s growing population in a sustainable manner,” he added.
“We are not closing the door on GM and we will continue to monitor the scientific research into the pros and cons of GM.”
But West Midlands dairy board chairman David Brookes said he was concerned Arla was bowing to the ‘prolific green lobby’ in Europe rather than basing its decisions on sound scientific evidence.
“There is no reason for it [choosing GM-free] but it is the public perception and I think we have to go where the public wants us to go in order to get the premium,” said Mr Brookes, who added it could be difficult for UK farmers to guarantee GM-free milk.
“We have to be careful about the practicalities and getting the logistics right. If just one in 30 farmers are able to do it then how will the collection of that milk work?”
Mr Brookes said while consumers were demanding milk from GM-free feed, they were ‘happy to wear T shirts and jeans made with GM cotton’.
“Eighty per cent of the world’s cotton is GM,” he added.
NFU dairy board chairman Michael Oakes said while any opportunity to gain any extra margin had to be welcomed, there was a danger producers would be shouldered with the extra cost.
“We have to welcome the fact Arla is looking for new markets and a point of difference but the cost of qualifying for it may be high,” he said, adding it would be interesting to learn more from the German example.
“Any type of added value is welcomed but there has to be balance. We also have to make sure the supply matches demand.”
Arla said while converting to GM-free feed could be costly, producers would be compensated in a similar way to those who converted to organic production.
Arla chief executive Peder Tuborgh said immediate demand was up to 1 billion kg of extra milk over the next 12 months and the firm expected to be able to pay an extra one eurocent per kg of milk produced.
Arla’s GM feed