Latest figures from studies into the cost of milk production indicate that German milk producers are facing a farmgate price well below their cost of production, the European Milk Board (EMB) has said.
The figures were recently published by BAL (German Office for Agriculture and Agricultural Sociology) in conjunction with the MEG Milch Board and the EMB.
They show that in October 2015, the costs of producing one kilo of milk averaged 44.37 cents, but at the same time the farmgate price of milk in Germany was only 29.01 cents.
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 per cent of costs are covered by the farm-gate price of milk. Under these conditions the EMB said it is increasingly difficult for farms to carry out repairs or make urgently needed replacement investments. Even wages cannot be sufficiently generated.
As the trend in the volume of milk on the market exceeding demand has also continued since October, the EMB predicted that 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: “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.”
The EMB is calling for voluntary restraints on supply to ease the crisis.
Source – The Dairy Site