Guaranteed price for December remains stable at 35.65 euros

6 December 2010


Prices for farm milk in Germany, Denmark, the Netherlands and Belgium are stabilising after rising almost continuously since the spring. As in November, the guaranteed price for the month of December is 35.65 euros per 100 kilos of milk. This brings the average guaranteed price for the full year of 2010 to 32.39 euros, compared with 26.40 euros in 2009.

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.

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

28,50

29,25

27.50

28.13

March

28.00

28.83

25.25

27.17

April

29.25

28.94

25.25

26.69

May

31.50

29.45

25.25

26.40

June

34.25

30.25

24.25

26.04

July

33.75

30.75

23.50

25.68

August

33.75

31.13

23.50

25.41

September

33.75

31.42

24.50

25.31

October

34.65

31.74

26.50

25.43

November

35.65

32.10

29.75

25.82

December

35.65

32.39

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.

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 December 2010 for a dairy farm delivering 500,000 kilograms of milk is EUR 35.79 per 100 kilograms of milk, exclusive of VAT.

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.