Differences in milk money to be achieved are increasing

The picture is not yet complete. Not all subsequent payments are yet visible, for example those of DOC Kaas. Cono has indicated that there will be no additional payment this year. The cooperative from Westbeemster has lagged behind in terms of milk price in the past two years, after having held a steady leading position for years.

Yet the maker of Beemster cheese is not doing too badly either. When it comes to the milk price paid per average member, Cono comes considerably closer to FrieslandCampina. At Cono, the average milk price paid for this year would be approximately €44,65 per 100 kilos, one euro lower than FrieslandCampina's average. This does not say everything about the amount of milk money that individual farmers can receive.

In 2021, Cono was still the top payer of milk money, both in terms of the basic milk price, the meadow milk price and the maximum milk price. In 2022, the North Holland cooperative was dethroned and Vreugdenhil took the lead in terms of the basic milk price and the meadow milk price. Fellow company A-ware then paid the highest milk price including surcharges. This year, FrieslandCampina leads the rankings, thanks to the sharply increased PlanetProof surcharges. Unfortunately, these are only for a small minority of all members.

At A-ware the wealth is spread more widely. There, between 40% and 50% of suppliers can receive the highest milk price. This is partly why the WP (actual price) of A-ware is higher than the GP (guaranteed price of FrieslandCampina. The WP also includes all surcharges, the GP does not include any additional surcharges.
 

Long term
If you look over the slightly longer term, you will see a somewhat different pattern. On average over the last three years, Vreugdenhil pays out the highest basic milk price and pasture milk price, although this sometimes seems to have been forgotten. A-ware continues to top the list when it comes to the maximum milk price.

Private individuals versus cooperatives?
Whether these figures should be interpreted as meaning that it is private individuals who perform best in the current market conditions is a question. The fact is that it is no longer automatically the cooperatives that bring the best financial results to dairy farmers.

There is much more to say about this, because the milk prices of DeltaMilk and CZ Rouveen are missing from the comparative figures. However, these are smaller cooperatives, with fewer members and (as far as Rouveen is concerned) also with more different milk flows, which also makes a comparison more difficult.

Payout vs to strengthen
At FrieslandCampina and DeltaMilk it is noticeable that it is difficult to balance between paying a high milk price and at the same time keeping the company structurally healthy. In practice, paying out a lot of milk money comes at the expense of healthy capital.

There does not necessarily have to be a direct connection, but in a situation with shrinking margins it can quickly turn into that. There is a real danger of erosion of the company from within. Thanks to the introduction of milk certificates, FrieslandCampina's so-called resilience is slightly better secured, now at around 23%. Before that it was only 18% to 19% for a long time. DeltaMilk is not in a stronger position. At the other extreme is Cono, which has equity well above 50% and could perhaps be a little more flexible with asset management at times. DOC Cheese is a different story, because it has actually become a supplier association with a share in the German DMK.

Payout and grow
Last year, the private dairy companies A-ware and Vreugdenhil were between FrieslandCampina and Cono in terms of equity (27% and 47% respectively), but their borders are well guarded and business development and payment of milk money appear to be less of an obstacle to each other. . The fact that A-ware's capital is now slightly lower than that of Vreugdenhil, for example, must also be seen in the light of the company's expansionary policy. Hard investments are being made in growth and sustainability.

For dairy companies it also matters a lot in which segment of the market they are active. This year, relatively good money was made from cheese, last year it was milk powder that brought in the most money, and now slightly less.

Increasing differences
Back to the milk prices: what is also striking in the comparison is that the mutual differences in payment appear to be increasing over the years. In 2021, there was an average difference of around €3,20 per 100 kilos between the highest and lowest payers, in 2023 this has risen to just €4,40 per 100 kilos. The biggest difference can be found in the maximum allowances. There it can make a difference of almost €7,40 per 100 kilos which processor is delivered to. It is expected that this gap will become slightly smaller in the course of 2024, because more processors will increase their maximum premiums. The Vreugdenhil farmers can receive extra money with the Low Carbon Initiative, DOC Kaas will produce sustainable cheese for Jumbo and pay the members an extra premium for this.