German producers are making heavy losses. This is according to figures on German milk production costs recently published by BAL (German Office for Agriculture and Agricultural Sociology).
The alarming figures leave no doubt there is an acute crisis in the milk market. The cost study published by BAL in conjunction with the MEG Milch Board and the European Milk Board (EMB) shows that the October figure for the price/cost ratio, which indicates the coverage of production costs by the milk price, is €0.65.
This means only 65% of costs are covered by the farm-gate price of milk. Under these conditions it is increasingly difficult for farms to carry out repairs or make urgently needed replacement investments. Even wages cannot be sufficiently generated.
It is not only in Germany that the prices paid do not cover costs. In the other European countries, too, prices are under the €0.30 mark. For instance, in Denmark and the Netherlands producers are paid only €0.29, and in Belgium the price has been about €0.25 for months. In Lithuania it was just €0.20 at the end of 2015, with some producers receiving only €0.10 a kilo of milk.
As the trend in the volume of milk on the market exceeding demand has also continued since October, in the medium term and most probably in the long term, too, milk prices will not recover. Romuald Schaber, President of the EMB, sees no chance of any improvement because of the current EU milk policy: "The deficit situation will continue, with the only increases being in debts and the number of farms closing, but not in urgently needed investments in the farms."
Emmy Koeleman studied Animal Sciences at Wageningen University in the Netherlands. She is the editor of Dairy Global and All About Feed.