Implementation of EU Merger Conditions for FrieslandCampina Raw Milk Begins

When it approved the merger of Friesland Foods and Campina, the European Commission placed conditions on raw milk to prevent FrieslandCampina dominating the raw milk market in the Netherlands.

01/07/09 FrieslandCampina has implemented the merger conditions for raw milk set by the European Commission. From 1 July 2009, the independent foundation, DMF (Dutch Milk Foundation), will be responsible for implementing the start up premium scheme for FrieslandCampina’s Dutch member dairy farmers. In addition, producers of fresh dairy products and naturally matured cheese in the Netherlands can buy, via the Dutch Milk Foundation, Dutch raw milk from FrieslandCampina.

When it approved the merger of Friesland Foods and Campina, the European Commission placed conditions on raw milk to prevent FrieslandCampina dominating the raw milk market in the Netherlands.

The following conditions apply:

* FrieslandCampina is obliged to make raw milk available to dairy companies in the Netherlands that process raw milk into fresh dairy products and/or naturally matured cheese, subject to predefined conditions.
* To encourage FrieslandCampina member dairy farmers to switch to another buyer of raw milk, a departure scheme applies, which provides for a departure premium.

The conditions apply to standard milk of Dutch origin, and not therefore to German or Belgian member milk, nor to organic or biodynamic milk. The conditions relate 1.2 billion kilos of raw milk annual milk supply. FrieslandCampina currently receives 8.6 billion kilos of milk annually from its member dairy farmers in the Netherlands, Germany and Belgium.

FrieslandCampina is obliged to make raw milk available subject to predefined conditions. This obligation applies to the fresh dairy business in Nijkerk, now sold to Arla Foods, the cheese business in Bleskensgraaf, which is yet to be sold, and to third parties in the Netherlands who wish to start up or develop the production of fresh dairy products and/or naturally matured cheese. Third parties wishing to buy the raw milk should be registered with the Dutch Dairy Board (Productschap Zuivel) as an industrial processor of raw milk in the Netherlands.

The standard term of the contract is twelve months and the other contract conditions have also been set. Buyers are required to purchase at least two million kilos of milk every month. The price is the FrieslandCampina guaranteed price, less one per cent for the first five years, with a settlement for taxes, transport and quality control.

Dutch member dairy farmers who wish to cancel their membership of FrieslandCampina and who plan to supply their milk to another buyer of raw milk in the Netherlands will receive a premium of 5.00 euros for each 100 kilos of milk. The milk volume supplied in the previous calendar year determines the level of the premium. The premium is paid within two months of a dairy farmer actually starting to supply milk to another buyer. If a dairy farmer ends his or her business or returns to FrieslandCampina within three years, the departure premium is to be repaid pro rata.