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27.11.2018

What's the matter with the dairy sector?

2013 – 2018: Realistic cost studies illustrate the true situation on the dairy market in the last 5 years

(Brussels, 27.11.2018) That is, in fact, a good question: What is actually going on in the dairy sector? Let's begin with some figures: 32.58 and 34.68 cents/kg. These were the average milk prices in Belgium and Germany respectively over the last five years. Is it possible to glean enough information about the state of the dairy sector from these figures? Not really. If we were to, however, consider production costs in these five years alongside, things definitely become clearer. The average production costs per kilogram of milk were 44.58 cents in Belgium and 43.15 cents in Germany.
Conclusion: With an average shortfall of 12 cents in Belgium and 8.50 cents per kilogram of milk in Germany, it comes as no surprise that those working in milk production earn much less than the average population.

This clear insight is possible thanks to a series of studies carried out by the Bureau for Rural Sociology and Agriculture (BAL) over the last five years. Starting with realistic calculations for Germany in 2013, a clear picture of the current situation on German dairy farms was finally available. France and the Netherlands joined the study in the same year and with the addition of Belgium, Luxembourg and Denmark, the study is now available for six milk-producing countries.

 

How are these studies different?

They are:

Regular and up-to-date: Figures are updated annually and even quarterly in some cases.

Comprehensive: Working hours invested in milk production are also considered while calculating costs, and that too, keeping the worker's role and qualifications in mind. This seems obvious, but you would be surprised by how often this is left out in other studies.

Representative: They use verifiable EU data from the Farm Accountancy Data Network (FADN), which is a very broad-based European data collection exercise.

Comparable: As it is based on harmonised EU data, the calculations for individual countries can be compared with each other.

 

What is the significance of these studies for European milk producers?
These studies offer great added value to dairy farmers in the participating countries. They make it possible for them to present a crystal-clear image of the current situation to policy-makers and to show that the current framework conditions for the dairy sector are lacking. Representatives of the Fair Milk brands refer to these figures in their negotiations with supermarkets to illustrate what the fair price for a litre of milk should be. Sieta van Keimpema, vice-president of the European Milk Board (EMB), also considers these calculations an important driving force: "They lead to public debate – at last. But these studies have also been a wake-up call for us milk producers. We have been shown the true worth of our work and our animals. And let's be frank, it also becomes painfully clear that our work is grossly undervalued. This has consequences for the future of farming. Only 6% of producers in the EU and 1.68% in the Netherlands are younger than 35. Only 15% fall within the category of 35-44 years."

According to BAL scientist Dr. Karin Jürgens, the balance of milk production costs and milk prices in all countries surveyed also shows the dilemma. "For years now, milk producers have had to live with milk prices that do not meet today's development requirements and their professional qualifications."

This has to change. An instrument to protect the dairy sector from crises would address this less-than-ideal situation to some extent. In this regard, the dairy farmers of the EMB call for the implementation of the Market Responsibility Programme (MRP).
Sieta van Keimpema on this point: "We want to constructively contribute to improving the situation on the dairy market. The cost studies are on the table to provide a clear picture of the sector. We present the MRP alongside to show what can be done to resolve crises."

 

Please find here the Market Responsibility Programme (MRP)

Please find here the cost study with results for 2017


Contacts:

EMB vice-president Sieta van Keimpema (EN, NL, DE) : +31 (0)612 168 000
EMB director Silvia Däberitz (EN, DE, FR): +32 (0)2 808 1936


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