News Milk
The 4 reasons of Arla's pessimism about the market
Although the milk price for December remains stable, the Scandinavian dairy cooperative Arla is not in the least positive about the situation on the dairy market.
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Arla keeps the milk price for December unchanged for the second month in a row. With an annual supply of 1 million kilos (at 4,42% fat and 3,57% protein), this results in a milk price of €32,31 per 100 kilos for suppliers in the Netherlands. Due to a currency correction, the payout price is slightly lower than last month.
Including premiums for grazing, quality and vlog, the payment price can amount to €35,98 per 100 kilos. In the milk price comparator van Boerenbusiness Arla has therefore belonged to the bottom regions in recent months.
Growing milk supply in times of corona
In an explanation of the milk price, the cooperative dairy group from Scandinavia points out a number of points of concern. These include growing production rates in many countries. Worldwide milk supply increases by approximately 1%. Normally this is a manageable increase, but due to the corona crisis, this growth is not desirable for the market. According to Arla, the second corona wave has had a negative impact on dairy sales. Cheese sales in particular have suffered from the lockdowns in many European countries.
Competition USA
When exporting milk powder to distant destinations, Arla has to deal with the cheaper ones competition from the US. The impact of this has been visible in the sky-high American export figures for almost the entire year. Furthermore, Arla says it is facing competition from India for the first time. A remarkable development, because although India is by far the largest dairy producer in the world, their influence on export markets is generally modest.
Brexit
Arla also mentions the influence of Brexit, which will become a reality from February 2021. It is not entirely illogical that there are concerns about this, given that Arla is one of the major processors in the United Kingdom. The impending Brexit mainly causes uncertainty for the dairy cooperative, something that many Dutch parties also agree with. A study shows that 1 in 3 companies in our country are not yet prepared for the British exit from the European Union.