News Milk
'Carton of milk should be 2,5 times more expensive'
The price of a carton of milk in the supermarket should increase by a factor of 2,5 to be able to really invest in sustainability. This is according to president Retail & Americas of FrieslandCampina Tuncay Özgüner. He was a participant in a panel discussion on Friday during the Frisian Foodture congress that kicked off The Week of Our Food in Bolsward.
Milk has 'simply become too cheap', according to Özgüner. "If you compare that to other categories such as water or cola, I seriously wonder why a nutritious product like milk has to be so cheap." The retail boss of FrieslandCampina would actually like to see what he true price calls, 'where the farmer of today is taken into account, but also the generations to come'. According to him, research shows that the price should be 2,5 times as much. He advocates a completely new distribution in the chain: "Then you could give a euro to the farmer, so that he can invest in the farm. Then the processing industry could get 50 cents. Then we can put that into R&D, but also into making our supply chain more sustainable. The retailer also has to work on his chain to make it more sustainable and also to a certain extent reporting of it."
Margins throughout the chain are very thin
Özgüner is proud of the sustainability steps that have already been taken, but he indicates that it is not enough yet. "We have to move towards net-neutral production. We do that by investing and continuing to focus on innovation, technology, green energy, but also by giving more space on farms. But if I now look at the 51 cents that the farmer now receives, that is not enough." According to the FrieslandCampina CEO, the margins in the entire chain are very thin. "If you look at the processing industry, we are at 10 to 15 cents. For that, we have to collect the milk, put it in a carton and take it to the customer. Well, then the retail sector has about 20 to 25 cents. But to be honest, that is not the bottom line. It is not all that much."
When Özgüner was responsible for purchasing at Albert Heijn (he moved to FrieslandCampina in 2016), they made a shift from 'transactional to strategic suppliers', he says. He increasingly sees the movement from short contracts 'where it is often only about price' to more long-term cooperation. "Five years is at least a period in which we can invest, both on the farm and in the factories."
If you look at the total volume of FrieslandCampina, he says they actually still have a shortage of such long-term contracts. In his opinion, they provide more insight into each other's networks and where the profit can be made. "By not looking at your own part in complete isolation, but also being interested in the other side. And then looking at: how can we achieve efficiency throughout that entire chain." According to him, the problem 'is/was' mainly with retail. "You also need customers who want to think long-term. To not only look at the price, but also take responsibility for the sustainability in that chain."
Linda van Eekeres
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