Guaranteed price for January: EUR 30.00 per 100 kilograms of milk

4 January 2010


Following a period of sharp increases, the prices for raw milk in Germany, Denmark, the Netherlands and Belgium are stabilising. As a result, the guaranteed price for January 2010 is EUR 30.00 per 100 kilograms of milk, exclusive of VAT.

The price for January 2010 is in line with the guaranteed price for November 2009 and is higher than the guaranteed price for January 2009. The fact that the guaranteed price for January 2010 is lower than that for December 2009 is almost entirely attributable to the absence of the correction that was included in the guaranteed price for December. This correction was necessary in December because the price increases for raw milk in the period from September to November 2009 were stronger than expected at the time when the guaranteed prices for these months were fixed. The correction in December was designed to equate the annualised guaranteed price with that of the annual milk prices for dairy companies in the above countries. The average guaranteed price for the 12 months of 2009 amounts to EUR 26.40.
The guaranteed price applies to 100 kilograms of milk with 4.41% fat and 3.47% protein and is exclusive of VAT. The guaranteed prive is the price that FrieslandCampina guarantees to pay the member-dairy farmers for the milk they deliver in the relevant period. This price is independent of the result of the FrieslandCampina company.
This guaranteed price does not include the effects of additional payments and charges, such as the quantum supplement and additional seasonal charges and payments. January, February and July are ‘neutral’ months in terms of seasonal levies and supplements: these are months with no seasonal levies or supplements. From March until the end of June the summer levy is applicable to the members of FrieslandCampina (2.30 euros per 100 kilos of milk). The members receive a seasonal supplement of EUR 3.65 in the period from August to November and EUR 1.00 in December. After settlement of additional payments and charges, the cash payment in January 2010 for a dairy farm delivering 500,000 kilograms of milk is EUR 29.21 per 100 kilograms of milk, exclusive of VAT.

FrieslandCampina guaranteed price

2010

2009

Per 100 kilo milk Cumulative average per 100 kilo milk Per 100 kilo milk Cumulative average per 100 kilo milk
January

30.00

30.00

28.75

28.75

February

27.50

28.13

March

25.25

27.17

April

25.25

26.69

May

25.25

26.40

June

24.25

26.04

July

23.50

25.68

August

23.50

25.41

September

24.50

25.31

October

26.50

25.43

November

29.75

25.82

December

 

32.75

26.40

Prices in euros per 100 kilograms of milk with 4.41% fat and 3.47% protein, excluding VAT. This price does not include additional charges or payments.

Milk price, guaranteed price and performance payment
The milk price FrieslandCampina pays its member dairy farmers for the milk they supply consists of the guaranteed price and the annual performance payment.
The guaranteed price is not linked to FrieslandCampina’s result. We base the guaranteed price on the average milk price for Germany, the milk price of Arla Foods in Denmark, the milk prices of Bel Leerdammer, Cono Kaasmakers and DOC Kaas in the Netherlands and the milk price of Milcobel in Belgium. These prices for raw milk are representative for the country concerned. In order to calculate the FrieslandCampina guaranteed price, we weight these milk prices for the volume of milk processed in the entire country in question. In total, this involves about 45 billion kilograms of milk. Each month, the guaranteed price consists of the expected guaranteed price in the relevant month and any settlement of differences in expectations from preceding months.
Unlike the guaranteed price, the performance payment does depend on the financial results of FrieslandCampina and the approved reservation policy. In principle, we pay out 25% of the company’s result in cash to the members as the performance payment, based on the guaranteed price. The performance payment is paid out annually, in proportion to the value of the milk delivered, following approval of the financial statements.