Rabobank predicts better margins for dairy farmers

In her youngest sector report Rabobank indicates that margins for Dutch dairy farmers could improve in the first half of 2024. In addition, the bank predicts lower milk production in our country, just like in many other European member states. 

After a difficult second half of 2023, better times are ahead in dairy farming, according to Rabobank. The rising milk prices that are being implemented by various processors these months are increasing dairy farmers' margins. Around the seasonal peak, Rabobank expects milk prices (including bonuses and premiums) to be around €50 per 100 kilos. These are payout prices at the moment are already feasible at FrieslandCampina and A-ware, among others, with their top milk flows. 

For 2024, the bank assumes an average European milk price of approximately €47,5 per 100 kilos. The recent increase in dairy prices for butter and cheese provides room for increases, although the market is broadly much more stable than last year.

Milk supply in the min
Rising milk prices do not lead to higher production in the Netherlands. Rabobank expects a decline of 2% in the first half of this year compared to the same period last year. This means that the decline is somewhat reduced compared to the 3% contraction that was still visible in January. The bank estimates that the impact of the national termination scheme for livestock farming locations (Lbv or Lbv-plus scheme) on dairy farming and milk volumes will be limited this year. Currently, 2,4% of dairy farms in the Netherlands have submitted an application for this scheme.

Rabobank also expects lower milk production across Europe. A decline of 2024% is expected in the first half of 0,6, but the contraction will probably weaken somewhat in the second half. With the exception of Poland, a decline in production is visible in almost all major milk-producing Member States. There is also a slight contraction in the United States. And although New Zealand produced more milk in January, the bank also suspects a limited decline there later this year.

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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