Alfa sets a critical milk price above 50 euros

The reduction of the derogation, increased interest rates and increased inflation are the biggest factors pushing up prices. Alfa expects that the milk price will eventually rise above the cost price again, but some catching up will have to be done. In the meantime, dairy farming is entering a difficult period.

The new situation follows a 'super year', as relationship manager Geert Veenstra describes the figures from July 1, 2022 to June 30, 2023. After the peak in 2022, the basic milk price fell by €20,00 per 100 kilos to the current level of €41,00 per 100 kilos in ten months. According to Alfa, this is well below the cost price, although there are large differences between individual companies, ranging up to €10,00 per 100 kilos of milk.

Worrying finances
The accountants and consultancy firm finds it worrying that despite the super year, entrepreneurs are already experiencing financial problems. The costs for cultivation and harvest have now risen considerably. A number of dairy farms are also due a high income tax assessment and the disposal costs of manure have risen sharply.

Manure collection uncertain
Dairy farmers will also feel the gradual abolition of derogation in their wallets. For an average entrepreneur with 55 hectares of grassland, Alfa calculates the disadvantage at €38.000. "A greater risk than the price per ton is currently the uncertainty as to whether the manure will be collected at all," Veenstra notes. The sales costs of manure, the increased interest and the decreased milk price result in a critical milk price of almost 53 cents.

There is perspective in the sector, but not every individual entrepreneur will be able to participate, according to Alfa. The organization states that the sector must survive in the coming years. Ultimately, the imbalance between milk supply and demand will be the driving force behind an inevitable milk price increase, she concludes.