Analysis milk
Processors in Belgium translate market into milk price more quickly
The €1,50 lower milk price published by the Belgian Milcobel last week makes one thing very clear: the purely Belgian dairies translate changes in the market into lower milk prices more quickly than the international processors.
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Milcobel implemented the adjustment in the milk price for November. A week earlier, Laiterie des Ardennes (LDA) already reduced the milk price for October by €2,00 per 100 liters. See for this Belgian Milk Price Comparator van Boerenbusiness.
In the meantime, A-ware and FrieslandCampina kept their milk prices the same in November and Arla even increased the milk price once again. These three companies operate in more markets than the Belgian one and therefore relate their pricing to other factors. FrieslandCampina and, to a certain extent, Arla too, mirror their milk prices to a fixed group of other companies and, through the system of weighted prices and 'baskets', keep each other increasingly captive over the course of the year.
Nobody wants to be the first
In addition, for the Dutch market, for example, no one wants to be the first to lower the milk price because of the battle for dairy farmers. There is therefore a good chance that the first milk price reductions for the Netherlands will only apply before the new year.
There is also a fierce battle for dairy farmers in Belgium, but there is apparently less fear there about translating lower earnings into lower milk prices. And there may be no other choice for some companies, but the annual reports will have to make that clear afterwards.
50% more milk money
Dairy farmers in Belgium have now benefited from the combination of sharply increased dairy prices and the ongoing battle for dairy farmers. On average up to and including November, a Milcobel member with an annual supply of 1,3 million liters of milk received €54,57 per 100 liters. That is almost €17,80 per 100 liters, or 50%, more than over the same period last year. The picture is the same at competitor LDA, although this cooperative has not yet determined a milk price for November. Arla lags slightly behind Milcobel with an average of €53,12, FrieslandCampina pays slightly more. This is all excluding additional payment. A-ware is well above the rest with an average of €56,55 per 100 liters, but this company has no additional payment.