On 17 December 2013 the Member Council of the dairy cooperative Zuivelcoöperatie FrieslandCampina U.A. agreed to amend the cooperative’s regulations, including the Milk Payment Regulation, and also to amend the policy on reserves. From next year, member dairy farmers will receive an annual performance payment amounting to 35 percent of the cooperative’s net profit, whereas they previously received a payment of 30 percent. Depending on the profit for the period, members will in future receive 75 percent of their pro forma performance payment for the first half of the year in September. The new Milk Payment Regulation will be set every three years and apply to the period from 2014 to the end of 2016.
In future, FrieslandCampina will add 45 percent (previously 50 percent) of its net profit to its reserves. The payment in the form of fixed member bonds will remain unchanged at 20 percent of net profit.
New milk content ratio
From next year onwards, the value of milk supplied by a member farmer will also depend on the ratio of protein, fat and lactose (10:5:1) in the milk. Each year, the Executive Board will determine the ratio for these components, based on a moving system set annually for three years at a time. This contrasts with the previous system, where the value of the milk was based purely on the protein to fat content. The Executive Board believes that taking account of the lactose in milk reflects the value that this component has for FrieslandCampina.
Milk price and performance price explained
From 2014, the milk price that FrieslandCampina pays to its member farmers will comprise the guaranteed price, the annual performance payment, the outdoor grazing premium, the premium for differentiated milk flows and the registered reserves for fixed member bonds. The FrieslandCampina performance payment also includes interest on the member certificates, fixed and free member bonds and the transfer to the company’s general reserve.
Payments to member dairy farmers are based on the volume of milk supplied. The Milk Payment Regulation is set every three years and determines the basis and system used for settling and paying for the milk supplied by members. Separate regulations apply to organic and biodynamic milk.