According to information released by Lebensmittel Zeitung and quoted in a report by Bord Bia's German office, following negotiations retail milk prices will fall by approximately 10c/litre.
Contract negotiations for milk-based products, except cheese, have resulted in the agreement on two-figure price reductions. The reductions will be effective from May.
This means a litre of fresh whole milk will cost just 49 cents rather than 59 cents in the shops.
The early conclusion of this period’s six-monthly contracts comes due to the oversupply situation in the dairy market.
The Lebensmittel Zeitungreports that “many dairies would rather sell more at lower prices than lose out on volume”.
As a result, dairies are asking farmers to cut production as milk prices are going to continue to fall.
Introducing a cap
Following a meeting at the Conference of Agricultural Ministers last week, a mandatory production cap will now be introduced in Germany.
However, there are doubts surrounding its effectiveness.
Eckhard Heuser, chief executive of the Association of the German Dairy Industry, said: “We cannot increase milk prices in Germany through political supply measures when the global supply and demand situation is sending a completely different set of price signals.”
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