Shrinkage and market fuel the struggle for the farmer

There is also something to get. For a long time there were not as many dairy farmers in the market for a transfer as there are now. Whichever way you look at it, this is due to the shaken confidence in the country's largest dairy cooperative. Anyone who wanted to leave there had been able to do so for twelve years with the help of an incentive bonus. Yet, with a few exceptions, limited use has been made of it. This is different now - 1 members left up to and including October 239 - and may also offer those asking for milk a strategic plus.

No action has yet been taken by the largest processor in the Netherlands. It has barely recovered from the time when the milk supply had to be slowed down. Last week the RFC members were prepared for new factory renovations.

Milk shortage expected
In the meantime, the other processors are preparing for the time when a milk shortage occurs in the Netherlands. This is expected because many older dairy farmers are giving up and succession is becoming increasingly difficult. Because of the nitrogen discussion, Natura 2000 zoning, the hassle with all kinds of other regulations and the increasingly unfriendly social climate. The latest figures from Statistics Netherlands support this picture. From 2020 to 2021, almost five hundred dairy farmers gave up. That is more than 3% of the total. Relatively speaking, things went even faster in the south of the country. In Limburg the decline was 4,75%, in North Brabant 3,7%.

Many dairy companies already see the downturn and have therefore made the switch internally. Where the rule used to be for many companies not to contract with milk, it is now: it is better to have too much milk than too little. For a long time it was thought that the sale of surplus milk on the spot market should be prevented. Now the fear of the spot market seems to be fading away. The prices there have not been very bad in the last year. The volumes of spot milk were generally small and the surcharges for milk with additional characteristics (meadow milk, Vlog) were good.

Extra capacity
The alternative would be to continue operating with a lower occupancy rate. That is the worst option for most companies, because it is more expensive than having too much milk. Most larger processors in the Netherlands (in addition to FrieslandCampina) have invested heavily in expanding their capacity in recent years. Examples are: A-ware, Vreugdenhil, Cono and Ausnutria. They do not want to have made those investments in thin air, and thus think they have the market on their side.

A similar process is underway in Belgium as in the Netherlands, with the difference that other factors play a role in the battle for dairy farmers. There has not yet been any decline in dairy farming in Belgium. Environmental problems are less prominent. The banks also appear to play a less critical role in whether or not they can take out financing. What is a parallel with the Dutch situation is that the market leader in dairy is in a weak position. In addition, it is largely the same (Dutch) companies that try to attract the departures from the other players.

Farmel
Farmel even takes the honor of currently paying the highest milk price in Belgium. This is because it is one of the few players that pays relatively high premiums for, among other things, grazing. Special milk flows and surcharges are not yet common practice in Belgium, but Farmel customer Passendale cheese has special requirements for the required milk and is prepared to pay for it.