Inside Milk
Arla suddenly tops the milk price comparison
The Scandinavian dairy cooperative Arla keeps the milk price for August the same for the seventh month in a row. That is a rare stable period, resulting in an interesting shift in the milk price comparison.
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Arla's milk price offers what dairy farmers generally want: stability. The Scandinavian dairy cooperative maintains fat and protein prices for August at prices of €3,95 and €4,35 per kilo respectively.
With an annual delivery of 800.000 kilos, this results in a payment price of €34,38 per 100 kilos in the Netherlands for the seventh month in a row (subject to minimal currency corrections). In addition, dairy farmers can earn a share grazing premium of €0,50 per 100 kilos.
Rare stable period
It has been a long time since the originally Scandinavian milk processor kept the payment price stable for so long. This has not happened in the Netherlands as far as history goes (since 2007). A connected period of 3 or at most 4 months was often the maximum in recent decades.
Arla's stable milk price increases the chance that FrieslandCampina will also keep the Guaranteed Price for August the same. This is because it is partly based on the payment price that Arla uses. This does not provide certainty, however, as FrieslandCampina's milk price only experienced 1 stable change this year during the month of March.
Top 3 milk price
What is striking is that Arla's milk price is steadily rising in the milk price comparison, as other processors have reduced payment prices in recent months. Between July 2018 and June 2019, the average milk price was €34,75 per 100 kilos. Arla therefore has to tolerate dairy companies Cono and FrieslandCampina. In July, Arla is even at the top. Although other milk prices have yet to be announced, it is unlikely that Arla will be surpassed.
Previously, Arla's basic milk price was often no more than 'mid-range'. This is because the payment prices in the Netherlands are generally higher than elsewhere in Europe. However, from a cooperative point of view, Arla pays the more than 10.000 member dairy farmers, spread over 7 countries, the same milk money. Arla has approximately 100 dairy farmers in the Netherlands.
It should be noted that the milk money including premiums is higher at other processors. This is because the grazing premium at Arla is relatively low.
Click here to view the milk price comparison.