News dairy market
Rabobank does not expect a significant milk increase
The challenges of our neighboring countries with regard to milk production are not that different from those of the Netherlands. This is apparent from an analysis published by Rabobank today (20 July). These countries also have to deal with the sustainability themes of animal welfare, biodiversity (including nitrogen) and climate. Furthermore, all countries suffer from the higher costs. According to the bank, consumers will have to pay more for dairy products in the coming months. The bank also expects that Dutch dairy farmers will not increase production significantly.
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In analysis compare sector specialists from Rabobank Nederland, Denmark, Ireland and Germany. "In a broad sense, there is uncertainty about a future revenue model, a sustainable margin, business succession and availability of labor in every country. The extent to which can differ per country, the focus is slightly different in one country than in another."
From a regulatory point of view, the discussion about animal welfare is clearly present in Germany, followed by Denmark, according to the sector specialists. "Biodiversity is currently most topical in the Netherlands. Denmark is (for the time being) the most ambitious with regard to climate. The Water Framework Directive and also the derogation are matters that are clearly points of attention in the four countries."
In terms of debt per kilo of milk, the Netherlands is at the top with €1,20. In Ireland, dairy farmers have the lowest debt, but relatively high interest is paid, which according to the specialists indicates a high interest rate.
2022 best year in the Netherlands since 2017
The margin development on the average dairy farm in the Netherlands is positive. "We therefore expect 2022 to be the best year since 2017. However, we do not expect the current margins to lead to a strong increase in milk production at farm and national level. Firstly, because the marginal costs (additional costs to produce 1 kilogram of extra milk to produce) are currently high. Second, for some dairy farmers, this is the time to make previously deferred investments, instead of growing. Third, Dutch milk production is limited by the phosphate rights and the uncertainty regarding the proposed nitrogen plans of the government.
Counting on product price increases
"The current circumstances are reason to settle the (substantial) cost inflation throughout the entire dairy chain. Consumers can count on a further price increase of (dairy) products in the coming months," the sector specialists say. "Part of this cost increase is of a structural nature and in view of the developments that will hit the sector in the coming years, additional costs – and possibly also revenues – will be added."