FrieslandCampina Concerned About Low Dairy Selling Prices

"The problem is cyclical rather than structural. We believe that economic recovery will ultimately also boost demand for dairy and that the long-term prospects for the dairy market remain good."

27 Jul 2009 FrieslandCampina has said that it is very concerned about the consequences of the low selling prices for dairy products and the resultant level of the guaranteed price for its members. “The way we view the European Commission’s report reflects these concerns and our responsibility to maximise the value of our members’ ex-farm milk,” the company stated. It made the following points:

• We agree with the European Commission that the current low prices are primarily the result of the economic crisis and the resultant drop in demand for dairy products. The problem is cyclical rather than structural. We believe that economic recovery will ultimately also boost demand for dairy and that the long-term prospects for the dairy market remain good.

• FrieslandCampina is pleased that the European Commission is committed to using the available resources to stabilise the market and continue supporting dairy farmers. Individual member states should not, however, be allowed to apply national measures that distort competition. National measures can provide some support for milk price levels in the short term, but they do not represent a structural solution in the medium to longer term. A level EU playing field is very important for our members as around 75% of our ex-farm milk is sold within the EU (25% outside the EU). We are consequently in favour of a level playing field in all member states and support the European Commission in those areas where it opposes national measures that distort competition.

• FrieslandCampina supports the study that the European Commission has announced on the spread of margins across the food chain, even though the spread of margins in the dairy chain is not the key reason for the currently low milk prices. As stated earlier, the key issue in this respect is the fall in demand. As a cooperative dairy business our key task is to achieve as high prices as possible for our members’ ex-farm milk. And what we earn goes to benefit our members, the owners of FrieslandCampina. Better insight into the spread of margins may create greater clarity and possibly help us to support our members. The subject of margins, and specifically how they are broken down, is however a topic that can be discussed for ever as we all always want to get the best margins for ourselves.