Milk price system

The milk price that our member dairy farmers receive for each 100 kilos of milk comprises four components:

1) Guaranteed price

FrieslandCampina has two guaranteed prices: a guaranteed price for farm milk from regular farms and a guaranteed price for farm milk from organic and biodynamic farms. In both cases, the guaranteed price is the price that the company guarantees to pay member dairy farmers for the farm milk they supply. The guaranteed price reflects the average farm milk price to be paid by a number of dairy companies in northwestern Europe, including supplementary payments, registered reservations, seasonal supplements, quantity supplements, maximum quality supplements, and cooperative supplements or charges. The amount for regular farms applies for an average supply of 925,000 kilogrammes of farm milk and for organic and biodynamic farms for an average supply of 550,000 kilogrammes on annual basis and is paid out in the milk components: protein, fat and lactose, in a fixed ratio of 6:4:0. The guaranteed price is published per 100 kilogrammes of farm milk, at 3.58% protein, 4.45% fat and 4.54% lactose, exclusive of VAT.

2) Duties and premiums

Various cooperative deductions and premiums are settled with the monthly milk money. An example of this is a fixed cost deduction. In addition, for Foqus planet Sustainable development, € 0.60 per 100 kilogrammes of milk is deducted. This amount is supplemented by the company. As a result, the amount that the dairy farmer earns within Foqus planet Sustainable development based on sustainability efforts can amount to € 3.50 per 100 kilogrammes of milk.

The allowances for Foqus planet Sustainable development per theme:

• For the Animal Health and Welfare theme, this is a maximum supplement of € 0.20 per 100 kilogrammes of milk.
• For the Climate component (greenhouse gas emissions) this is a maximum allowance of € 1.50 per 100 kilogrammes of milk.
• For the Biodiversity theme, this is a maximum allowance of € 0.50 per 100 kilogrammes of milk.
• For the Grazing theme, this is a maximum payment of € 1.30 per 100 kilogrammes of milk, with full grazing.
• Members receive a payment of € 0.40 per 100 kilogrammes of milk for partial outdoor grazing.

The premiums within the Foqus planet premium depend on the scores of the farm on the various indicators of Foqus planet Sustainable development.

The company FrieslandCampina contributes the difference between the total payments and the total deductions within Foqus planet Sustainable development. For example, for outdoor grazing, the company contributes € 1.00 per 100 kilogrammes of milk to the outdoor grazing premium of € 1.30 per 100 kg of milk.

Participants of the special milk flow On the way to PlanetProof are rewarded in a different way for their results within Foqus planet Sustainable development (as part of the special milk flow), via a fixed On the way to PlanetProof allowance (see below).

3) Premium for special supplements

Within FrieslandCampina there are special milk flows for which milk must meet special requirements. Member dairy farmers who supply this milk receive a premium for this. Currently, there are four special milk flows for which members receive an extra bonus. These are: milk with the On the way to PlanetProof quality mark (€ 5.00 per 100 kilogrammes), VLOG-Pro Weideland (€ 1.00 per 100 kilogrammes), Landliebe (€ 1.00 per 100 kilogrammes) and Organic Dynamic milk (€ 4.10 euros per 100 kilogrammes).

4) Interim payment and cash subsequent payment

An interim payment is paid no later than 1 October based on the results of the company in the first half year and the amount of milk delivered. The interim payment is 75 percent of the pro forma cash subsequent payment on the value of the quantity of milk delivered in the first half year. The final settlement takes place in March of the following calendar year, based on the annual results of the company and the total quantity of milk delivered.

The cash subsequent payment depends on our financial results and the retained earnings policy adopted. Member dairy farmers receive 40 percent of our net profit as cash subsequent payment, based on the guaranteed price and after deduction of the interest payment on member bonds, member certificates and profit attributable to participating interests. The cash subsequent payment is paid annually after adoption of the financial statements in proportion to the value of the milk delivered in the previous financial year.

General disclaimer

As a precaution FrieslandCampina informs you that there are risks connected to the milk certificates, member certificates, member bonds-fixed and member bonds-free. These are subordinated claims. FrieslandCampina has the right, but not the obligation, to repay the milk certificates, the member bonds-free and the member bonds-fixed and the interest payments for the member certificates, member bonds-fixed and member bonds-free can be suspended under certain circumstances. The member bonds-fixed and non-tradeable. The milk certificates and the member bonds-free are limited tradeable on the internal market of FrieslandCampina provided that there is sufficient demand. These financial instruments cannot be regarded as ordinary investments because of the afore-mentioned and other risks connected to them. It is important that this is taken into account by the current and future holders of these instruments.