Costs for German dairy producers have reached an “all-time high” to coincide with continuing declines in milk prices for farmers, the European Milk Board (EMB) has said.
The EMB – an umbrella group of EU dairy farmer organisations – cited data from Germany which found that production costs for dairy farmers there stood at an average of 47.73c/kg in 2022, while the average producer price in the same period amounted for 53.18c/kg.
Producer prices in Germany, as well as other countries, are continuing to slide downwards due to higher volumes and declining demand.
This, the EMB said, pushes long-term cost coverage for the sector “further and further away”.
“Meanwhile, EU policymakers are hinting that they will simply let this trend carry on and do not see any need, for example, for voluntary volume reductions,” the board said in a statement.
“This is bad news both for farmers and consumers, because instead of turning to a tried and tested crisis instrument of voluntary volume cuts and finally introducing the necessary reforms to stabilise milk production in the EU, the sector is being driven back into a serious crisis,” the statement added.
The EMB is calling for the implementation of a ‘Market Responsibility Programme’ (MRP), which it has developed to work as a “legally anchored crisis instrument to counteract the chronic cost shortfall”.
The MRP, the EMB said, would observe and react to market signals by aligning production accordingly.
Dairy market impact on Ireland
In Ireland, milk prices paid to Irish dairy farmers have been declining very significantly over the last number of months.
In the latest processor milk-price announcement, Carbery Group announced its milk price for March supplies today (Wednesday, April 19), confirming a net reduction of 4c/L for last month.
The processor reduced its price for milk supplied in March by 6c/L and applied a 2c/L support from its stability fund.
If this decision is replicated across the four west Cork co-ops of Bandon, Barryroe, Drinagh and Lisavaird, this will result in an average price of 44.44c/L, including VAT and a 0.5c/L somatic cell count bonus.
Meanwhile, Dairygold has confirmed a 4c/L reduction to 42c/L, based on standard constituents of 3.3% protein and 3.6% butterfat, inclusive of sustainability and quality bonuses, and VAT, for March supplies.
Arrabawn co-op said that “due to weaker global dairy market conditions” its board also decided to reduce its price for milk supplied in March.
It has reduced its price by 4c/L to 44.19c/L inclusive of VAT at 3.6% fat and 3.3% protein.
Kerry Group will pay suppliers a base milk price of 40c/L, including VAT, for milk at 3.3% protein and 3.6% butterfat. This marks a drop of 4c/L from the base price for February supplies.
In the Republic of Ireland, Lakeland Dairies reduced its price for milk supplied in March by 4c/L to 42.85c/L inclusive of VAT at 3.6% fat and 3.3% protein.