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Denmark's Milk Production Cost Calculated at 43 Cents Per Kilo

02 October 2015

DENMARK - The cost of production for milk in Denmark has been calculated using EU data, including an allowance for providing income for self-employed farmers.

According to the study carried out by the German BAL (Büro für Agrarsoziologie & Landwirtschaft), in 2014 total production costs of one kilogramme of milk in Denmark were 43.32 euro cents. After deducting subsidies of 4.33 cents the cost is 38.99 cents per kilogramme of milk in Denmark.

The result includes a so-called income rate, which corresponds to the minimum value that self-employed dairy farmers – both farm managers and family workers – should include in their costs, depending on their professional qualifications.

According to the European Milk Board (EMB), this distinguishes the study from others, which either do not include an allowance for workers to be paid, or only allow for insufficient payment in the cost of production.

The results follow calculations of cost of production in Germany, France, Belgium and the Netherlands.

EMB said that in 2009 there was a shortfall of 38 per cent in Danish farmers' budgets, due to low milk prices not covering production costs. Their costs were not covered until 2014, when production costs fell and milk prices rose.

According to Kjartan Poulsen, President of the Danish dairy farmer association LDM, this was sorely needed, as in the previous years substantial deficits prevailed throughout the industry.

"But the situation has significantly deteriorated again this year, as in Denmark as well milk prices are plummeting, reaching a level of currently only about 29 cents," said Mr Poulsen.

The EMB said these figures showed the necessity of placing limits on production to avoid the market being saturated, with measures including the Market Responsibility Programme.

"In such times of crisis we need an instrument which prevents unnecessary volumes from being produced in the first place," Romuald Schaber, President of the European Milk Board (EMB).

TheCattleSite News Desk

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