Dutch giant Friesland Campina has dropped its guaranteed milk price for December 2014 to 30.75 c/kg of milk. That price is 3.75 c/kg lower than in November 2014 (34.5 c/kg).

Friesland Campina said the reduction of the guaranteed price is the consequence of a lower forecast for the milk prices of the reference companies in December.

Friesland set the guaranteed part of their farm gate milk price using a price reference from a basket of neighbouring European milk processors. The rest of the Dutch farm gate prices is a performance premium based on actual sales of Friesland product above the European average and a dividend to Friesland shareholders from the member bond reserve.

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Friesland outlined the following reasoning for the drop in milk prices:

  • Global milk supply remains high because of favourable weather and production conditions. On the other hand, the demand for dairy is stagnant and the Russian boycott of EU agricultural products interferes in the market and price setting of dairy products.

    • All in all, the Friesland guaranteed price for 2014 as a whole will be 39.30 euros/kilogram. LTO milk prices for 16 European co-ops for standardised milk dropped from a rolling average of 40 c/litre to 37.5 c/litre in the September 2014 league.

    At the recent National Dairy conference Frans Keurentjes, Supervisory Board member for Friesland Campina said, “more milk is not a burden, it’s a blessing and we must look at the opportunities and aim to be best in class. On milk price, he said it is up to individual co-ops to be cost effective...co-op member suppliers must demand their co-op add value to the chain.”