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Milk production no longer follows price in Germany
The milk price in Germany has risen sharply again this year, the Milchindustrie Verband (MIV) has found. However, production is no longer responding to this. It used to be different. This is a cause for concern for the German dairy industry, because where is the availability of milk headed?
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MIV chairman Peter Stahl wonders whether many German dairy farmers have not grown tired of the multitude of new regulations in recent years and are throwing in the towel. He does not consider the danger of declining production to be imaginary. Small dairy farmers in particular are having a hard time and are also finding it more difficult to find a successor. The age at which a company is taken over is also increasing in Germany. This is an issue for all companies.
Restricting the ban on tethering
The ban on tying up in particular is a sticking point for many smaller companies. The MIV therefore advocates setting a transitional period of 10 years and also setting a lower limit below which the smallest farms are exempt from the regulations.
The stagnating milk production (5 million tons for about 31 years), which is reinforced this year by a decreasing fat content in milk, is now causing record prices for butter. A 250 gram pack of butter now costs €2,39, a price that has never been seen before in Germany.
Milk fat is tighter and more popular
The MIV expects that this will remain the case. On the futures market, the price peak has now passed, although physical prices remain high.
However, it is not only the stagnating milk production and the low fat content that make milk fat so expensive, says Stahl. Consumers are also choosing more full-fat cheese and other full-fat dairy products with more fat. As a result, there is extra little left to make butter from.
Dairy processors welcome the development, because fuller dairy products are healthier for people, doctors are quoted as saying.
From a market perspective, it is a vulnerability that the high milk price for farmers is actually based only on the fat, and that the protein - which is recommended in all nutritional strategies - is lagging behind. More balance would have been better, also for the companies that can do less with milk fat.
The decline in milk production in Germany is currently somewhat less rapid than last month. In October, the decline according to the MIV is 2,1%, up to and including October it is 0,3% compared to last year.