FrieslandCampina is expecting to pay its member farmers a guaranteed price of approximately 36.50 euros per 100 kilogrammes of raw milk for the whole of 2013. The substantial increase in the guaranteed price is due to the decline in the milk supply in New Zealand as a result of drought combined with the lagging milk supply in Europe. For the year 2012, FrieslandCampina paid its member farmers a guaranteed price of 33.87 euros per 100 kilogrammes of milk.
FrieslandCampina presented its guaranteed price forecast for 2013 at its first district members’ meeting, held on the evening of Monday 25 March. CEO Cees ’t Hart said: “Price quotations for many dairy products have risen sharply in recent weeks. Higher prices were bid for milk powders in particular at the Fonterra internet auction. Butter prices are also rising sharply due to the fact that stock levels are low across the board. The drought in New Zealand and the low levels of milk supply in Europe mean that supply is more limited than previously anticipated. This is leading to rapid price hikes.”
The reduction in the supply of farm milk and growing demand for dairy products in Asia and Africa underlie the higher forecast for the FrieslandCampina guaranteed price for 2013. ’t Hart: ”We are now expecting an average guaranteed price of approximately 36.50 euros. It’s always difficult to make predictions, of course, but there’s a clear upward trend. That means we’ll have to raise our sales prices. We will be talking this over with our customers in the very near future.”
Guaranteed price 2012
For the whole of 2012, FrieslandCampina paid its member farmers a guaranteed price of 33.87 euros per 100 kilogrammes of milk. The milk price for 2012 was 36.24 euros. The difference is due to the distribution from the FrieslandCampina profit of the performance price and the member bonds, which totalled 2.37 euros.
Milk price and guaranteed price
The milk price which FrieslandCampina pays to its member farmers each year consists of the guaranteed price, the annual performance price and the distribution of fixed member bonds (registered reserves) for milk with a fat content of 4.41% and a protein content of 3.47%. All amounts are exclusive of VAT.
The guaranteed price is the price per 100 kilogrammes of milk that FrieslandCampina guarantees to pay its member farmers. The guaranteed price corresponds to the average annual prices for farm milk, including payment in arrears and any registered reserves, for the reference companies in Germany, Denmark, the Netherlands and Belgium.
The guaranteed price is estimated each month based on the trend in the published milk prices of the benchmark businesses in the Netherlands, Belgium, Germany and Denmark. Any adjustment to the estimated milk prices can be implemented in a subsequent month.
See also: milk price explained