German Milk Producers Facing Heavy Losses

GERMANY - The German milk production figures calculated quarterly by BAL (Office for Agriculture and Agricultural Sociology) indicate huge pressure on dairy farmers for January 2016.
calendar icon 19 April 2016
clock icon 2 minute read

The European Milk Board (EMB) reported that in addition to falling prices resulting from overproduction in the milk market, rising costs have led to increasing losses for milk production.

It cost 44.94 cents to produce one kilogram of milk in January. The average farm-gate price of 28.66 cents a kilo nowhere near covered this expenditure, as clearly shown by the price/cost ratio of 0.64. Thus only 64 per cent of costs were covered by the farm-gate price.

The German prices for March have since dropped even further, and are now between 21 and 29 cents. Only a few smaller dairies paid a higher farm-gate price.

But German producers are not alone in Europe. For instance, dairy farmers in Denmark are being paid only 27 cents, and in Belgium the price has already plummeted to 22–23 cents a kilo of milk.

Romuald Schaber, President of the European Milk Board (EMB), explained why he thought forecasts continue to be negative: “Although the EU policy-makers decided on measures in March, they are neither binding for every member state nor do they affect every milk producer. If they were, they might have an effect.”

The EMB said that EU measures designed to allow producer groups to voluntarily limit milk production would not work, because some countries have said they will not implement it.

The organisation is lobbying instead for financial incentives for all producers in the EU to limit production, and financial penalties for those that increase production.

Mr Schaber commented: “The current EU policy measures are more of a distraction than a solution.”

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