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Inside Milk

Milk price advantage evaporated by cost price

June 21, 2019 - Redactie Boerenbusiness - 5 comments

Zuivelcoöperatie FrieslandCampina has been paying an above-average milk price for years, but the cost price is also many times higher than the European average. This worries the LTO Dairy Farming department.

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An above-average milk price is necessary to remain competitive at international level. "If the European milk price comparison, which ZuivelNL carries out on behalf of LTO Netherlands, shows that that price can no longer be achieved, the department will expressly raise this with the Dutch government," said Wil Meulenbroeks, chairman of LTO Melkveehouderij, Thursday June 20.

FrieslandCampina earned more than average in 2018, but is still in third place among the best-paying European dairy companies. This has been the case for years. FrieslandCampina is even at the top of the list of exporting countries. "We will sound the alarm well before we drop to a position that is below average," Meulenbroeks emphasizes during the presentation of the annual milk price comparison.

Above average cost
It is evident that the cost price in the Netherlands is well above average, compared to other European countries. However, representative figures have never been published by ZuivelNL, Wageningen Economic Research or accounting firms. The above-average cost price is also evident from the figures of the European Dairy Farmers, but this network has insufficient participants abroad to make a reliable comparison of cost price developments.

The differences between European countries are partly explained by the correlation between the price paid to dairy farmers and the cost price of milk production. The lower the cost price, the lower the milk price. The same applies the other way around. It also has to do with the trade balance. Partly for this reason, the net importing countries (such as Finland and Italy) are the leaders the milk price comparison.

Innovative power
"In order to remain competitive at an international level, it is important that innovation is promoted and that restrictive regulations are abolished," the professional group emphasizes. "The strategy to create added value has so far led to an above-average milk price being paid," says Jos Verstraten, portfolio holder at LTO Melkveehouderij.

Partly for this reason, the department is confident that the growing number of milk flows in the Dutch dairy industry offers dairy farmers added value. "There is a revenue model in the various milk flows. Otherwise the dairy industry would not do it," Verstraten concludes.

Company name Country 2018 2017 Verschil
Granarolo (North) Italy  €38,36  €39,81 -3,60%
value Finland  €36,74  €36,64 + 0,30 %
FrieslandCampina The Netherlands  €36,07  €38,56 -6,50%
Arla Denmark  €35,48  €36,46 -2,70%
a-ware The Netherlands  €35,13  €37,95 -7,40%
Social (pas-de-Calais) France  €34,93  €34,37 + 1,60 %
Danone (pas-de-Calais) France  €34,55  €34,47 + 0,20 %
Lactalis (Pays de la Loire) France  €33,98  €33,55 + 1,30 %
Hochwald Milch eG Germany  €33,74  €34,08 -1,00%
Savencia (Basse Normandy) France  €33,69  €33,93 -0,70%
Muller (Leppersdorf) Germany  €33,02  €35,38 -6,70%
DMK Germany  €32,91  €35,65 -7,70%
dairy gold Ireland  €32,75  €34,26 -4,40%
Milcobel Belgium  €32,72  €35,75 -8,50%
Dairy Crest (Davidstow) England  €32,67  €32,65 + 0,10 %
glanbia Ireland  €32,59  €34,31 -5,00%
Kerry Agribusiness Ireland  €32,51  €34,31 -5,30%
Average    €34,23  €35,42 -3,40%
         
Other processors
Emmi Switzerland  €48,25  €51,88 -7,00%
Fonterra New Zealand  €29,40  €31,63 -7,10%
Class III USA  €31,49  €63,22 -13,10%

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