FrieslandCampina and Arla share joint care

The problem is most acute at FrieslandCampina. With just 9 billion kilos of milk, there is a risk of losing critical mass, but the proposed merger with Milcobel will provide a solution. At least for the time being, because approximately 900 million kilos extra will provide some breathing space. However, the Belgian dairy farming sector is struggling with some of the same problems as the Dutch. Due to strict environmental regulations, more and more farmers are stopping and the total milk production is also increasingly at risk.

Arla has a larger milk volume of 13,8 billion kilos, and is also slightly less efficient in terms of valorisation, because it makes slightly less turnover per kilo of milk. At Arla, the turnover is roughly €1 per litre of milk, at FrieslandCampina the turnover is more than €1,50 per litre of milk. Arla can therefore still get a little more value from its milk volume. The return at FrieslandCampina is also higher, although the total profit and the milk price do not ultimately differ that much from each other.   

Both companies say they expect milk supply to continue to decline in the coming years, but do not venture to make any forecasts about this. The situation in which the two dairy giants find themselves is actually symbolic of the state of the dairy sector in all of North-Western Europe, with the exception of Great Britain. There too, milk supply is declining, but there more due to other factors.

Fierce competition for dairy farmer favors
The dairy companies in North-Western Europe that want to stay will have to compete hard for the dairy farmer's favour in the coming years. That is a blessing in disguise for the dairy farmer, who is having a hard time on all fronts, but it is a burden for the processor. The battle is being fought hardest in the Dutch dairy sector, where cooperatives are reducing or eliminating their entry fees and where the acquiring party is paying the exit fee. However, it also has cross-border consequences, in Belgium and in Germany along the Dutch eastern border. That is where perhaps the most new members and suppliers are currently being recruited. A cooperative like DMK is watching this with dismay, because it is also noticing less milk.

Arla is not yet very actively involved in the fight, but also embraces newcomers with love. Even in Northern France, the expected establishment of FrieslandCampina on their borders is being watched with concern. Coöperatie Sodiaal, for example, fears that its farmers will also be pulled.

Farmers put on the dike
The only North-Western European country that is not pulling the dairy farmer is Great Britain. There, large dairy companies such as Saputo and Müller are putting farmers in remote regions on the dike to save costs, with the result that the milk supply also decreases. The abandoned dairy farmers have no alternative. Lactalis announced last year that it also wants to get rid of farmers in Eastern France, but there is often someone else who wants them. In Great Britain, this is usually different. Such luxury problems are far from an issue in the manageable North-Western Europe.