In the interview below, Dr. Karin Jürgens from the Büro für Agrarsoziologie & Landwirtschaft (Agro-sociological and agricultural studies office, BAL) in Germany, already commissioned by the EMB and allied organisations to produce two studies on the costs of milk production in Germany and France, answers questions on the background to and specific criteria of these milk cost surveys.

How were the production costs worked out, and on what basis?

The substantial basis for working out the production costs is the farms’ accounting data gathered by the European Union, known as the FADN data. What is important is that these farms’ accounting data are officially collected and fed into a common pan-European data network. We specifically selected these data because they are representative and officially recognised, as well as subject to quality control by the European Union.

What are the specific features of these cost studies and how do they differ from other agricultural cost surveys?

From many years of experience I can say that the database used is the broadest of its kind available for recording milk production costs. It’s a key difference from previous standard farming sector analyses carried out by private consulting firms or agricultural administrators like the chambers of agriculture. These are usually based merely on a few farms surveyed in a specific region, generally sizeable farms, and not on a random sample. That is why the data are not representative.

Even if the FADN data are sometimes criticised for recording only the larger farms or those where farming is the only activity, the selection is in fact comprehensive enough to compare the milk production costs of farms of varying size in different regions.

Did the study results surprise you?

What surprised me about the cost study in Germany was that the results show scarcely any difference between milk production costs in regions with relatively large farms, like the East German Bundesländer of Thuringia and Brandenburg, and regions with mostly smaller farms. This is chiefly due to very high wage costs on those farms.

And when farm size categories within a region are compared there are hardly any cost differences in paid costs, i.e. the production-related costs of feed, seed, buildings and machinery. Apart from the input and machinery costs, the small farms can therefore produce at similar costs to those of larger farms.

Otherwise the study results both in Germany and France confirmed the loss-making cost situation in milk production long criticised by farmers. An analysis of the results makes it quite clear that there are significant location-specific differences in the costs of milk production between different regions, such as coastal locations and mountain regions. Unfortunately these differences have so far not been sufficiently balanced out by political instruments like the compensatory allowance for disadvantaged areas.

So far Germany and France have been studied. Can the study be extended to other countries as well?

Yes, we’re doing that already. The next cost survey is planned for the EU member states the Netherlands and Italy as well as Switzerland, which has a similar farm accounting data network. As the accounting data of every EU member state are collected through the FADN, the studies can be extended without a problem. This is only one side of the coin, though. The second and equally important strategy is to update the studies regularly. For Germany we have already published several quarterly updates using the Milk Marker Index.

Regardless of whether we are conducting a new survey or updating costs, the crucial factor is invariably the trusting collaboration and in-depth discussion of the methods and results with the farmers from the respective countries as the experts and partners on the ground.

Christian Schnier (EMB)