German dairy farmer can switch again

The German cartel service will stop litigating against DMK, now that the dairy processor has adjusted the delivery conditions. According to Andreas Mundt, chairman of the Cartel Service, it has become much easier for German dairy farmers to switch processors. 

In March 2017, the regulator in Germany published a study on the delivery obligation between dairy farmers and dairies. In total, the supply contracts at 89 different dairies were examined. Conclusion: the long-term contracts between producer and buyer would block mutual competition between dairies.

More switchers
Since the outcome of the investigation, progress has been set in motion. For example, DMK (the largest processor in Germany) has halved the notice period from 24 months to 12 months. There is talk of adjusted delivery terms throughout the sector. According to the cartel service, this is an important step towards mutual competition between dairies.

Significantly more dairy farmers have switched to another processor in recent months. DMK will therefore lose more than 20% of its milk supply in the coming months. Between 2013 and 2015, only 1% of dairy farmers switched processors.

European regulation
According to the cartel service, the changes in the German dairy landscape coincide with the new European legislation. Article 148 in the Common Agricultural Policy (CAP) will soon be revised, giving Member States more say in (cooperative) delivery agreements between producer and processor.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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