The arrival of milk flows presents dairy farmers with a choice

At the pump you can choose between regular fuel and premium fuel. More colors and flavors are also appearing on the dairy shelves of supermarket chains. Dairy processors are fully committed to milk flows, which gives dairy farmers a choice.

Gone are the days when milk was just milk. Meadow milk is now an established concept and VLOG milk seems to be on the rise. In addition, more and more quality marks are appearing that also prescribe sustainability criteria. Nowadays, these quality marks often form the basis for new milk flows.

Milk flows come in all shapes and sizes. There are already numerous 'intermediate flows' between and conventional and biological. Virtually every major processor is now focusing on milk flows and uses standards that exceed the statutory requirements. However, not everyone is happy with that. Several skeptics see the demands of milk processors as unwanted interference and see the barn as the domain of the farmer. Others see these requirements as an opportunity to earn extra milk money.

The common denominator of these milk flows is that production is demand-driven: the production process is organized on the basis of the wishes of the buyers, or is based on the requirements of objective quality marks. New producers are only welcome if the sales space permits. This is an attempt to avoid an imbalance between supply and demand (and therefore a low milk price).

Lots of enthusiasm at FrieslandCampina
Wiebren van Stralen, strategic program manager at dairy cooperative FrieslandCampina, is involved on a daily basis with milk flows and tries to link 'sales' and 'production'. According to him, it is not possible to make a cross-section of a 'PlanetProof dairy farmer'. This is because the selection criteria are based on 3 themes: animal welfare, nature and climate. Dairy farmers who want to participate can register through various recruitment rounds. "There was a lot of interest in the first recruitment round. In the end, even more than 2.000 dairy farmers showed an interest in PlanetProof."

Of those few thousand applicants, 600 are farmers who now produce for the quality mark. "There are more dairy farmers who meet the requirements, but because the supply is tied to market demand, not everyone can participate." This means that FrieslandCampina has often had to say 'no'. Within the selection criteria, the company makes a selection by, for example, looking at the transport distance to the factory.

Van Stralen expects the market to diversify further. "Almost all major dairy processors are committed to this." In Germany, for example, the share of VLOG milk is growing. Coöperatie FrieslandCampina is therefore also conducting research into the milk flows that can be sold on the world market. "In China, for example, there is an increasing demand for organic dairy products. Such trends also offer opportunities for milk flows."

A-ware and Farmel
A-ware is also fully committed to milk flows. A-ware has divided the milk collection into 5 milk flows. From a competitive point of view, A-ware does not report anything about the volumes within the milk flows, although it is known that the usual milk flow is becoming smaller and that the milk flow is largest for Albert Heijn. The premium for this milk flow is €3 per 100 kilos, on top of the basic milk price (with grazing bonus). A-ware Farm Milk stands for VLOG and additional animal welfare requirements, although grazing is not mandatory for that milk flow. The premium for this milk line is €1,25 per 100 kilos.

Jumbo's milk flow is also striking. The milk is supplied by 6 Farmel dairy farmers, who receive a premium of €6 per 100 kilos (including grazing premium). This milk flow is much smaller than that of A-ware and FrieslandCampina. To meet the requirements, farmers must guarantee, among other things, a more animal-friendly barn and better care for the calf. In addition, grazing for cows and young stock, feed from local producers, herb-rich grassland and space for meadow birds is an obligation. 

Caring Dairy renewed
While the milk flows of A-ware, FrieslandCampina and Jumbo are relatively young, Cono has been involved in production and marketing that exceeds the legal requirements for more than 10 years. This is done through the 'Caring Dairy' program, which has recently been renewed. Based on 18 different indicators, dairy farmers can earn a premium of €0,75 per 100 kilos of milk. As of 2020, the dairy will ban the use of glyphosate and GMO feed.

Wim Betten, general manager at Cono Kaasmakers, says: "We do this because the market demands it. We also want to remain distinctive and so we are at the forefront in this. So I don't call us forerunners, because they will be overtaken one day . Being and staying distinctive, that's what it's all about for us." The system with 18 points is not without obligation, because Cono aims to use this as standard by 2025. It does, however, emphasize that the dairy farmers should be properly guided in the steps to be taken.

Are extras the new standard?
Other milk processors are also making extras the new standard. There is probably no room left for dairy farmers who do not take the step. Meadow milk is already more or less the standard in supermarkets: will premiums remain premiums in the future, or will milk money be cut if the standards are not met? The latter is an option that dairies are still a long way from, but cannot be ruled out in advance.

The point to be made here is that milk flows are less optional than is sometimes thought. After all, in Germany the processors are threatening to stop the milk collection at farmers with a group barn. On the other hand, dairy farmers' raison d'être is under pressure and society longs for sustainable steps. New milk flows are a helping hand in that direction.

Receive the magazine in your letterbox
This abbreviated article is part of the 2019 dairy analysis. The subscribers of Milk and Feed Pro have recently received it. Would you also like to receive this magazine? then click here to become a subscriber and receive the magazine sent to you.

With a subscription you get access to all private articles, data and market information on Boerenbusiness. As a subscriber you also get free access to the National Economic Agricultural Congress and other interesting seminars and workshops. Curious about all the benefits? View our offer in the webshop.

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

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.