Why DOC Kaas is the winner of the milk price rally

In October last year, the milk price of DOC Cheese was still at the bottom of the table basic milk price comparator. Almost a year later, the situation is completely different. In August, DOC Kaas quietly passed Vreugdenhil Dairy Foods when the powder producer's payout price leveled off. In September the DOC milk price increased again. The difference with FrieslandCampina, A-ware and Leerdammer Lactalis, companies that also announce the milk price prior to the month, is now more than €2. On balance, the DOC milk price rose by no less than 65% in recent months to well above €60 per 100 kilos.

Reputation is mediocre
DOC Cheese has a reputation for a moderate milk price, while that of Cono Kaasmakers is considered to be high. The milk price rally over the past 12 months teaches us that such assumptions can be thrown into the trash. The milk price of Cono Kaasmakers (one of the leaders last year) is now lagging considerably behind the rest, while DOC Kaas is ahead of the pack.

This development has to do with the current dairy market. Bulk dairy in particular is benefiting from the scarcity that has driven prices to great heights. The prices of branded dairy products are having difficulty maintaining the premium. DOC Cheese benefits from this. Cono cheesemakers focuses on branded cheese, but that strategy is currently less profitable.

At DOC Kaas they often remain modest, but the catch-up race in recent months is worth mentioning. Especially because the first years after the merger with the German dairy cooperative DMK were difficult. After all, the promise in 2016 was that the milk price would improve, but that did not happen. Many dairy farmers left. Even more than 150 members in 2019. They subsequently claimed the promised merger bonus through the courts. This painful period is now behind us.

Membership numbers are growing again
The number of members is now growing again. This is something that the cooperative is also committed to, like so many milk processors in the Netherlands do. This spring, cooperative chairman Guus Mensink concluded in an interview that DOC Kaas is rightly in the spotlight again. He was referring to the restored peace in the cooperative, but especially to the milk price, which is competitive again. This summer, the milk price has risen further to become the leader by a wide margin.

Viewed over a longer period (average over the past 12 months), Vreugdenhil Dairy Foods is the best payer with a milk price above €50. Other processors don't even come close to that. Neither does DOC Kaas, although the difference will become smaller if they can hold the leading position for longer. The large margin of €2 provides guidance to maintain the lead and thus definitively break with the reputation of a mediocre payout.