European Dairy Council: study shows farmers' incomes are low or non-existent

The European Dairy Board (EMB) said a new study shows dairy farmers have high production costs but low or no income.

Research “What does MILK production cost?” was prepared by the Bureau of Rural Sociology and Agriculture (BAL).

In addition to the study of milk production costs in the eight milk producing countries in the EU, the latest wave of cost studies also includes an EU average for the first time. In 2019, the average cost was 45.35 cents/kg. With average EU prices of 34.52 cents/kg, the cost-coverage gap is significant, according to EMB.

“This clearly points to an imbalance problem across the EU,” said Sieta van Keympema, President of the EMB.

With Ireland and Lithuania recently added to the BAL study, EMB says the data now includes opposite ends of the cost spectrum.

In Ireland, thanks to a unique production system, the production cost figure of 34.21 cents/kg was the lowest in 2019. However, there is also a trend towards cost-coverage deficits, as costs rose significantly over the period included in the study, but prices have not evolved accordingly, EMB said.

As a result, during three of the five years the study was conducted, EMB said, even in this country with extremely favorable conditions for milk production, the costs were not covered.

Lithuania, with its differentiated farm structure and many small farms, tops the list with the highest production costs (58.63 cents/kg). With an extremely low milk price of 28.79 cents/kg, EMB says producers in the Baltic countries are struggling with a huge cost-coverage gap of 51%.

EMB said cost analyzes in two major dairy countries, the Netherlands and Denmark, also show that there is no income left after costs are deducted. it must be emphasized that we are talking about the Netherlands and Denmark - countries with very modern farms that are constantly mastering new technical developments. But in spite of this, these operating dairy farms are left without a penny as a result,” said van Keympema.

EMB says that only Ireland manages to come close to the estimated income.

The study shows that farms will be able to contribute to the implementation of measures for the protection of the environment, climate and animal welfare, which involve higher costs, only if their economic situation improves steadily.

PioneerProduct based on dairyreporter.com