Gap between milk prices and production costs persists in Germany

woensdag 16 januari 2019

Gap between milk prices and production costs persists in Germany

The current calculation of production costs in Germany shows that only

85% of production costs were covered in October 2018. This is a slight improvement of 5%

compared to the July figures; in January 2018, cost coverage was still 88%.

The quarterly figures for Germany published by the Farm Economics and Rural Studies Office

(BAL) confirm that the gap between milk prices and production costs continues to widen.

Production costs amounted to 42.92 ct/kg in October 2018 and were slightly lower than in July.

However, farm-gate milk prices were not sufficient to cover production costs. In October 2018, milk

producers received 36.37 ct/kg.

Erwin Schöpges, dairy farmer from eastern Belgium and President of the European Milk Board

(EMB), does not see any convergence of milk prices and production costs in the coming months.

"We expect higher feed costs this winter, as milk producers in Germany and other countries will

have lower feed stocks available due to the summer drought." In view of these figures for German

milk producers, the EMB calls on the German government to assume its responsibility in

agriculture. It should support a responsible EU milk policy that enables farmers to earn a sufficient

income from their production. Above all, it is important to offer young farmers perspectives and

enable them to take over family farms.

Evolution of milk production costs in Germany

Here you have the evolution of milk production costs in Germany from 2009 to October 2018.

Price-cost ratio (shortfall)

The price-cost ratio illustrates to which degree milk prices cover production costs. In October 2018,

producers only recovered 85% of their production costs from the milk price; the shortfall was thus

15%.

Here you have the cost shortfall since 2009.

Milk Marker Index (MMI)

The Milk Marker Index represents the evolution of milk production costs. In October 2018, the MMI

was at 104, i.e. production costs for German dairy farmers had risen by 4% as compared to the

base year 2010=100.

Here you have further information about the Milk Marker Index over time.