Hochwald farmer turns more milk money in the Netherlands

The German Hochwald is a smaller cooperative than DMK, but last year it paid out almost a cent more milk money than its big German brother. Both companies are also active in the Netherlands with a branch. DMK with the DOC cooperative in Hoogeveen in Drenthe and Hochwald with a branch in Bolsward (Friesland). 

A difference in payout between DOC members and German DMK farmers also exists. However, this is mainly formed by the quantity surcharge and premiums, such as the grazing premium, which are often higher in the Netherlands than in Germany. Basically, the milk prices between DMK and DOC do not differ much.

Bigger difference at Hochwald 
At Hochwald it's a different story. The approximately 140 dairy farmers who supply Hochwald Bolsward have been paid a better milk price than their German colleagues for years. According to some of these Dutch suppliers, this sometimes amounts to a gap of €0,02 to €0,03 per kilo of milk.

Calculated for the month of May Boerenbusiness together with Willem Koops from ZuivelNL, who also always calculates the LTO milk price comparison, the difference between the milk price for a Dutch Hochwald farmer and what the price would be converted into in Germany (see table below the article). 

In the basic price, the Dutch dairy farmer arrives at a price of €32,68 per 100 kilos of milk. This is based on its contents of 4,27% fat and 3,39% protein and an annual supply of approximately 1,6 million kilos of milk. In Germany he would receive a basic milk price of € 31,71 for the same conditions. That is € 0,97 less.

3 reasons
The difference is made up of 3 main things: In Germany, the calculation is always based on a basic price, while in the Netherlands the price is calculated on the basis of the fat and protein price. In addition, Hochwald Nederland uses a negative raw material value, a kind of deduction for the processing of the water in the milk and an incentive to achieve high levels. Hochwald Netherlands also applies a quantity surcharge. This was abolished at Hochwald Germany in July 2018.

The difference in milk money paid increases when the premiums are added. The biggest difference is in the grazing premium for which the Dutch Hochwald supplier receives €0,011 cents, while he would receive nothing in Germany. Hochwald Germany does work with the Milchplus sustainability program, which can yield a maximum of €0,01 per kilo of milk. On average, this yields a plus of €0,06 for dairy farmers there.

The Dutch Hochwald farmers are suppliers and not members. They will therefore not receive any additional payment. This does apply in Germany, but the level has been very low for several years. When investing in new facilities a few years ago, Hochwald Germany forced its members to agree that the company would have to pay almost no additional payments for a few years in order to make the necessary investments.

Promise partially fulfilled
The Dutch Hochwald suppliers were transferred from Nestlé 10 years ago when the Swiss food giant sold its dairy factory in Friesland. The promise was that suppliers would be paid a market-based milk price. At the current level they cannot match FrieslandCampina's guaranteed price and are therefore not entirely successful. However, the fact that the price is higher than that of its German colleagues can be explained and is largely accepted. After all, payment prices in the Netherlands have been higher than in Germany for years.

How to deal with this is a choice for every dairy cooperative that is also active elsewhere. Hochwald has chosen to pay more in the Netherlands and that is a good thing for Dutch suppliers. If Hochwald were to pay out at the German level in the Netherlands, suppliers here would clearly not receive a price in line with the market.