Inside: Dairy Market
Payment method is out of step with butter price
The shifts in market prices for fat and protein are generally not reflected in the way in which dairy farmers are paid. This is the conclusion of market analyst Willem Koops of ZuivelNL in the latest milk price comparison report on milkprices.nl, which was published today.
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The exception is the USA, where prices for protein and fat are derived directly from the market yields of the fat and protein component. Of the European companies, only the Scandinavian Arla and the Irish Dairygold have quite recently adjusted the price ratio in favor of fat.
2:1
is the fixed one
Protein and fat price ratio
Arla periodically adjusts the ratio between protein and fat prices. For example, in March 2017 it was reduced from 1,6 to 1,4. Dairygold adjusted the price ratio in favor of fat in November 2016 and May 2017. From May 2017, Dairygold will pay 1,64 times as much for a kilo of protein as for a kilo of fat. The USA class III milk price is the only one based on monthly varying ratios between fat and protein prices. Until 2013, FrieslandCampina used a varying ratio between protein and fat prices every month. From 2014 onwards, a fixed ratio of 2:1 applies between the protein and fat price
base price
The milk price comparison shows that the Swiss Emmi, the Finnish Valio, the French Lactalis, the Dutch DMK and the German Hochwald all pay at least 2,5 times as much for protein than for fat. It should be noted that these companies all use a basic price with fixed prices per unit of more or less fat and protein.
Revaluation of butterfat
The rapidly rising butter price has largely contributed to the average milk price being €ct 2016 higher per liter of milk compared to May 7,09. A percentage increase of 27,1% in one year. According to Koops, the revaluation of butterfat is the main reason for the rapidly rising butter price. Butterfat turns out not to be as unhealthy as was long assumed.
Higher seasonal levy
The British Dairy Crest is the only company that is not recording an increasing milk price and has announced further price reductions for the coming months. The lower milk price of the British Dairy Crest is due to a higher seasonal levy and the fall in the exchange rate of the British pound. The milk prices of the major European cooperatives will rise further in July.
Above average
In the latest milk price comparison for the month of May 2017, FrieslandCampina scores an above-average milk price of €ct 35,02 excluding additional payment (4,2% fat, 3,4% protein, 500.000 liters). DMK does not exceed €ct 32,81. On average in Europe, €ct 2017 per liter of standard milk was paid in May 33,28.