‘Catastrophic’ German milk price at 54% of cost

A huge gap between milk price and production cost has prompted German farming leaders to increase their demands for market intervention.

Germany’s July milk was worth, on average, 20.65c/kg (17.5p/kg) less than it cost to produce, according to the latest figures from the German Office for Agrisociology.

Producers received an average 24.4c/kg (21p/kg) compared with a 45.05c/kg (38p/kg) cost of production. 

See also: Producer Organisations – what they can offer dairy farmers

The German Farmer’s Association (DBV) yesterday called for state action on what it termed a market crisis and demanded processors be more flexible and market-oriented.

The DBV said current market structures were unable to cope with an increasingly liberalised post-quota market place.

This follows what the European Milk Board (EMB) described as high levels of participation in voluntary production cuts which offered 14c/litre (12p/litre) in September for each litre produced below the rate in the same period last year. 

Such uptake showed the extent of the milk crisis and also how European policy can effectively induce collective market reactions from producers, said the EMB, which represents about 100,000 milk producers from 16 EU member states. 

Production down

The DBV said German production had been 5% down on 2015 levels since May.

While the market upturn was forecast to continue, farm leaders said that 26c/kg (22.7p/litre) by the end of the year was not nearly enough to compensate for the losses of the past months.

Recent EMB announcements peg several European countries at a cost of production of above 40c/kg (34.9p/kg).

However, in Belgium and the Netherlands farmgate prices averaged 22.7p/litre and in France were at 30.9p/litre.

A DBV spokesperson said: “The reasons for the current market recovery lies, in particular, in a growing demand for dairy products and the reaction of dairy farmers to extremely low prices.

“Despite the improving market, we still require politics and processing to help us in market crises which may be ahead.”