FrieslandCampina

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More than 10% lower milk price from FrieslandCampina

2 March 2021 - Eric de Lijster - 2 comments

FrieslandCampina pays the member dairy farmers a performance price of €2020 per 35,72 kilos of milk for 100. This is 10,7% less than the performance price for the year 2019. Due to a significantly lower profit, members do not receive a cash supplementary payment and no member bonds can be issued.

The profit of the cooperative dairy group fell by 71,6% last year to €79 million. FrieslandCampina announced this this morning (March 2). After taxes, a loss (negative total result) of €50 million remains, according to the annual report. Turnover fell by 1,4% to €11,1 billion.

The global dairy group attributes this decline entirely to currency effects. "The direct and indirect consequences of the corona pandemic, which became really noticeable within the company from March, overshadowed the excellent results in the first quarter. FrieslandCampina's operating result was hit hard as a result," CEO Hein Schumacher said in a statement. 

Huge downer for members
He continues: "In addition, the accelerated execution of the Our Purpose, Our Plan strategy - a major but necessary decision for a company to operate successfully in the future - has resulted in a restructuring charge of €106 million in 2020. Both factors led to to a significantly lower profit, which means that no cash supplementary payment can be made over 2020 and no member bonds can be issued. A huge downer for our members."

As a result of the lower profit, FrieslandCampina does not make any cash supplementary payments to the member dairy farmers. Also, no member bonds are issued. The dairy group paid out €2019 million and €107 million respectively to its members via these channels. The interest on member bonds of €31 million is paid to the members, the dairy group reports.

Negative cash impact
However, there is still a financial setback for the members. The interim payment that was paid in September 2020, i.e. 75% of the pro forma cash supplementary payment for the first half year (€0,11 excluding VAT per 100 kilos of milk for the entire year), will be entered into by FrieslandCampina in line with the milk regulations. 2021 to settle with the members. "In order to limit the negative cash impact for the members, this settlement will take place on the milk money bill of May 2021 (in June 2021), with other cooperative settlements also taking place," reports the dairy cooperative.

The FrieslandCampina milk price for member dairy farmers, excluding performance premium and issuance of member bonds, fell by 2020% over 5,9 to €35,72 per 100 kilos of milk. The FrieslandCampina guaranteed price for 2020 was €34,46 per 100 kilos of milk, a decrease of 3,4% compared to 2019. The decrease is due to lower milk prices from the reference companies, partly as a result of the corona crisis, FrieslandCampina reports.

The compensation for special milk flows was €0,36, 10 cents per 100 kilos more than in 2019. Divided over all milk, the meadow grazing supplement and Foqus planet contribution came to €0,90 per 100 kilos of milk, €0,25 per 100 kilos more than in 2019

Results remain under pressure
Because the corona pandemic is still continuing, Schumacher is counting on FrieslandCampina's results to remain under pressure in the first half of 2021. After that, the global vaccination program should provide relief. "However, I am convinced that the acceleration of our strategy, combined with structural cost savings, will enable us to better absorb shocks and increase the positive impact in the post-corona period," said Schumacher.

FrieslandCampina will explain the results for 2020 at a press conference this morning.

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Eric the Thrush

Eric is a member of the editorial staff of Boerenbusiness. As a descendant of an arable family, farmer's blood flows through Eric's veins. He considers himself a generalist, but with a preference for economics, trends, markets and marketing.
Comments
2 comments
Subscriber
milk pie 2 March 2021
This is in response to it Boerenbusiness article:
[url = https: // www.boerenbusiness.nl/melk/ artikel/10891232/ruim-10-lagere-melkprijs-van-frieslandcampina]More than 10% lower milk price from FrieslandCampina[/url]
that promises something for 2021 and 2022
Leendert 2 March 2021
3-4 Euro less for 100 kg of milk makes the difference between profit and loss for the dairy farm or the future of dairy farmers. The milk price is too low. For a liter pack in the supermarket, the price for yogurt varies from 0,75 - 1,82 euros. For a factory fee of a few cents, the factory earns 5x and the supermarket 20x.
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