German dairy sector positive about market, despite FMD

This was said by Detlev Latka (pictured right), the new chairman of the German Milchindustrieverband (MIV) on the occasion of a review of the past year. The dairy sector is still tense about the FMD outbreak east of Berlin, but it seems that it will remain a one-off case. There is damage to exports, but agreements have now been made with various markets outside the EU so that exports can still take place.

However, the outbreak is a reason for the MIV to urge improvements to the veterinary infrastructure, so that veterinarians in particular can act more effectively on site.

Business climate not good
Latka was not only positive about the normal course of business in the industry. There are concerns about the declining milk supply (last year -0,5%) and the continuing decline in the number of dairy farmers. There are partial explanations for this, such as the outbreak of bluetongue, which negatively affected milk production last year, but that is not all. The deteriorating business climate for dairy farmers is also a serious concern, said Latka, who is also the CEO of Hochwald Foods in everyday life.

Milk price fortunately high
"Fortunately, the milk price is now relatively high," says MIV director Börgermann. Indicating that this motivates dairy farmers to continue. With an average milk price of 48 cents (at 4,0% fat and 3,4% protein), it was the second highest milk price achieved in Germany.

The German dairy industry itself is also suffering from the negatively developing business climate, according to Latka and his deputy Hans Holtorf (Frischli). According to him, the industry is suffering from far-reaching bureaucratization in combination with legislation that is also poorly constructed.

Unworkable legislation
Often companies really do not know where they stand. As an example, they mentioned the new legislation for disposable plastic packaging. It is not possible to get a clear picture of which types of packaging are covered and which are not. Nevertheless, the industry is expected to comply. Legislation that forces the dairy industry to make additional contractual agreements with dairy farmers about price, duration and volume of milk deliveries also bothers them, while not all farmers are waiting for it either.

The animal welfare legislation - with multiple welfare levels (Haltungsstufes) - does not sit well with many processors. It forces them to work with many more milk flows than they are used to. These are milk flows with each their own price level, while these additional prices are not always earned back. The Austrian Salzburg Milch was mentioned as a deterrent example, which has 11 different milk flows. The average German company cannot work with that.

More cheese, less butter
In terms of dairy sales, cheese did very well last year. 2,7% more of this was sold in retail. Butter sales fell by 3,4% compared to 2023 due to the high prices, but remained above the 2022 level, despite record high prices for Germany of €2,40 per 250 gram pack. Furthermore, sales in the 'weisse Linie' (drinking milk) did very well in relative terms. With a decline of only 0,6%, this segment remained more or less stable for the first time in a long time, to the relief of the industry.

Surplus organic
Meanwhile, sales of milk substitutes are stagnating a bit. Sales of oat milk are still rising slightly, but it is no longer something the MIV is wary of. The German consumer still largely opts for regular dairy products. Even organic milk seems to be out of favor. There is a large oversupply, which often has to be sold as regular dairy products, according to Börgermann.