The German small farmers’ association (Arbeitsgemeinschaft bäuerliche Landwirtschaft, AbL) has expressed strong criticism about the planned merger of Arla Foods, a Danish-Swedish dairy cooperative, and the German DMK Group. AbL especially deplores the lack of transparency and predicts potential disadvantages for producers.

In the words of Claudia Gerster, AbL Federal President and farmer in Saxony-Anhalt: “All mergers and growth initiatives by cooperative dairies to date have hardly benefitted farmers and have often left them worse off. In fact, for many years, DMK as the largest processor paid some of the lowest farm-gate prices in Germany. Things have only improved in recent years. The planned merger of the Arla Foods and DMK Group dairies creates a new cooperative giant, and what happens next is well known – structures become larger, more fragmented and more opaque. Though DMK and Arla are still cooperative dairies, their massive growth means that they are now far removed from the cooperative ethos of generating more value for members and have mutated into a large corporation. The recent BayWa crisis (crisis of confidence between the management of the agricultural corporation and its farmer cooperative members following risky expansion strategies, leading to the Chairman of the Board stepping down in 2023; editor’s note) very clearly showed our farmers how steps towards extreme growth infiltrated cooperative structures and left farms and those working on them to bear the consequences.”

Claudia Gerster explains further: “A major issue for farmers in these cooperatives is that Arla and DMK’s information policies leave much to be desired. Suppliers currently do not know more than what has been released to the press. That is simply scandalous. Farmers will be asked to decide on the merger at the General Assembly in summer. AbL demanded that the dairies first put all the facts on the table. There are some points that are important for farmers: How would this specifically improve their revenues? How would the different farmer participation shares be dealt with, given that the two dairies have different contributions per litre of milk? What are the exit criteria for suppliers who do not agree with the merger, i.e. are special termination rights foreseen? Will all suppliers even have their say when it comes to deciding on this merger? Will the dairies drop their blockade against compulsory contracts post the merger and allow their suppliers to participate in the market?”

Ottmar Ilchmann, dairy farmer and AbL President for Lower Saxony, adds: “Large cooperative dairies have always been especially effective in blocking any and all market policy improvements that would benefit their suppliers because they are oriented towards global markets and therefore need milk as a cheap raw material. They have no interest in higher, cost-covering milk prices for producers. This means that their interests are diametrically opposed to those of farmers. When it comes to decision-making processes, individual members do not have the legal nor economic knowledge or resources to effectively exert influence. Monopolistic structures and long lock-in periods mean that it is not actually possible for members to change dairies. AbL speaks out in one voice with our colleagues from the European Milk Board and demands that such cooperative structures be urgently rethought and a political framework to empower producers be put in place.”

Berit Thomsen, Spokesperson for Animal Welfare and Market Policy, AbL

Multiple Swiss farmers’ organisations have called into question the role and legitimacy of the interbranch organisation IP Lait through a parliamentary motion. Their demand: a fairer governance system, more transparency in contracts, and milk prices aligned with production costs.

The milk price is currently acceptable for most Swedish producers. A few dairies are unable to match the price offered by the market leader, but there is a general hope among farmers that milk prices will at least remain at their current level.

The European Parliament and the Council of the European Union wish to amend the legislation on animal transports. According to the draft regulation, it will no longer be possible to transport calves younger than five weeks and weighing less than 50 kg. This measure would have severe economic and practical consequences for dairy farmers.