German dairy farmers cover costs for the first time in July

EU must take measures to stabilise its producer structure, said EMB
calendar icon 20 October 2022
clock icon 2 minute read

The quarterly update of the cost study by the Bureau for Rural Sociology and Agriculture (BAL) shows that German dairy production costs in July 2022 were 47.31 cents/kg, while the average farm-gate milk price for the same period was 55.04 cents/kg. For the first time since the publication of these calculations, cost coverage was finally achieved in the German dairy sector, the European Milk Board (EMB) said in a recent press release.

The trend emerged as early as April 2022. Since then, producer prices have only increased further. However, this has not led to a significant increase in milk production. In fact, the milk volume in July 2022 actually decreased compared to July 2021 – production dropped by 0.6%. In the months between January and July 2022, production shrank by 1.3% compared to the same period in the previous year. 

"It is plain to see that the situation on dairy farms does not allow for any significant reaction to higher prices, given that cost shortfalls have been the norm in recent years," EMB said in the release.

Milk production needs long-term, stable prices which allow for sufficient profit, in addition to cost coverage that includes a fair income for producers. 

"This is the only way to stop the collapse of the production structure and to make it possible to attract young people to the sector once again," the release said. "Policy-makers must take action to ensure a stable production structure and thus food security in the EU."

Strong producer organisations across dairies, crisis instruments like the Market Responsibility Programme (MRP), a socially-sustainable CAP, and fair contract conditions or even mirror clauses for EU imports are just some of the necessary framework conditions that need to be put in place, according to EMB.

This is even more important because not all milk producers in the EU are paid cost-covering prices. For example, despite the massive rise in costs on dairy farms, producer prices for July in France were merely 44 cents/kg of milk. 

"Socially and environmentally sustainable agriculture is impossible in such conditions," the EMB release concluded. "But it remains the urgent need of the day."

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