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16.01.2019

Gap between milk prices and production costs persists in Germany

(Brussels, 16.01.2019) The current calculation of production costs in Germany shows that only 85% of production costs were covered in October 2018. This is a slight improvement of 5% compared to the July figures; in January 2018, cost coverage was still 88%. 

The quarterly figures for Germany published by the Farm Economics and Rural Studies Office (BAL) confirm that the gap between milk prices and production costs continues to widen. Production costs amounted to 42.92 ct/kg in October 2018 and were slightly lower than in July. However, farm-gate milk prices were not sufficient to cover production costs. In October 2018, milk producers received 36.37 ct/kg. 

Erwin Schöpges, dairy farmer from eastern Belgium and President of the European Milk Board (EMB), does not see any convergence of milk prices and production costs in the coming months. "We expect higher feed costs this winter, as milk producers in Germany and other countries will have lower feed stocks available due to the summer drought." In view of these figures for German milk producers, the EMB calls on the German government to assume its responsibility in agriculture. It should support a responsible EU milk policy that enables farmers to earn a sufficient income from their production. Above all, it is important to offer young farmers perspectives and enable them to take over family farms.

 

Evolution of milk production costs in Germany

Here you have the evolution of milk production costs in Germany from 2009 to October 2018.

 

Price-cost ratio (shortfall)

The price-cost ratio illustrates to which degree milk prices cover production costs. In October 2018, producers only recovered 85% of their production costs from the milk price; the shortfall was thus 15%.

Here you have the cost shortfall since 2009.

 

Milk Marker Index (MMI)

The Milk Marker Index represents the evolution of milk production costs. In October 2018, the MMI was at 104, i.e. production costs for German dairy farmers had risen by 4% as compared to the base year 2010=100.

Here you have further information about the Milk Marker Index over time.

 

Study on milk production costs in six key milk producing countries

Cost calculations are regularly carried out in Germany but also in five other countries. They as well clearly show that milk producers are not paid cost-covering prices.

New: The calculations of milk production costs in Belgium, Denmark, France, Germany, Luxembourg and the Netherlands for 2017 are now available. You can find the study here as well as the figures at a glance in a short video.

 

A chronic shortfall between production costs and milk prices – What is the solution?

The European Milk Board promotes a legally-anchored crisis instrument to counteract the chronic cost shortfall. The Market Responsibility Programme (MRP) observes and reacts to market signals by aligning production.

Here you have a short description of the EMB Market Responsibility Programme.

 

Background: Commissioned by the European Milk Board and Germany's MEG Milk Board, the Farm Economics and Rural Studies Office (BAL) started compiling comprehensive data on milk production costs in Germany in 2012 for the study entitled "What is the cost of producing milk?". The calculation is based on data from the EU Farm Accountancy Data Network (FADN) as well as the Federal Statistical Office (Destatis), and has been updated every quarter since 2014.

 

Download the data sheet here

 

Contact:

EMB director Silvia Däberitz (EN, DE, FR): +32 (0)2 808 1936


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