Biodynamic milk

Milk produced in accordance with the organic and supplementary biodynamic production methods applying in the country in which the milk is produced, and that is qualified by the board as special milk.

Cash payment

The monthly payment made by FrieslandCampina to member dairy farmers per 100 kilogrammes of milk supplied, is the guaranteed price based on the protein, fat and lactose content, plus the volume-based premium and less deductions for fixed costs and the cooperative schemes. Quality penalties and bonuses, and any fines based on the Practice Regulations are settled each month. The prices are exclusive of VAT.

Cooperative schemes

The cooperative schemes involve a deduction of 0.87 euros per 100 kilogrammes of milk to finance the volume-based premium, a deduction of 0.35 euros per 100 kilogrammes of milk for partial financing of the outdoor grazing premium and financing of the partial outdoor grazing premium and of 0.25 euros per 100 kilogrammes of milk to finance the Foqus planet premiums. The deduction and payout for the outdoor grazing scheme takes place once a year in December. The deduction and premium payout for the Focus planet scheme will take place in April 2016, for the full calendar year of 2015.

Discounted price

The discounted price consists of the guaranteed price, the performance payment, the outdoor grazing premium and the special milk flows premium.

Fat price

The price of a kilogramme of fat. This price is used to calculate the milk price (together with the protein price and the lactose price). With effect from 2014, payments for milk will be based on its protein, fat and lactose content. The protein, fat and lactose content is shown in euros per 100 kilogrammes of milk and in a ratio of 10:5:1.

Fixed costs

Costs that are the same for each dairy business, such as payments for quality control and advice, Foqus Plant, milk account and accounting. The fixed costs for 2016 amount to 960 euros annually or 80 euros per milk price bill.

Fixed member bonds

(registered reserves)

The amount of the registered reserves depends on the results of FrieslandCampina and the retained earnings policy. With effect from the financial year 2014, FrieslandCampina will reserve 20 per cent of its results in the form of fixed member bonds. This amount will be distributed annually following the adoption of the financial statements, pro rata to the price of the milk supplied.

Guaranteed price

The guaranteed price is based 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 are the average annual prices, including payments in arrears and registered reserves. These prices for raw milk are representative for the country concerned. In order to calculate the FrieslandCampina guaranteed price, these milk prices are weighted for the volume of milk processed in the entire country in question. In total, this involves about 50 billion kilogrammes 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. The price is expressed in euros for 100 kilogrammes of milk with 3.47 per cent protein, 4.41 per cent fat and 4.51 per cent lactose, and is exclusive of VAT.

Lactose price

The price of a kilogramme of lactose. This price is used to calculate the milk price (together with the protein price and the fat price). With effect from 2014, payments for milk will be based on its protein, fat and lactose content. The protein, fat and lactose content is shown in euros per 100 kilogrammes of milk and in a ratio of 10:5:1.

Milk price

The milk price that FrieslandCampina pays its member dairy farmers annually consists of the guaranteed price, the annual performance payment, the outdoor grazing premium, the special milk flows premium and the issue of fixed member bonds (registered reserves).

Organic milk

Milk produced in accordance with the organic production methods applying in the country in which the milk is produced, and that is qualified by the board as special milk.

Outdoor grazing premium

The outdoor grazing premium amounts to 1.00 euro per 100 kilogrammes of milk. The premium is paid if the dairy cows graze outdoors for at least six hours per day for at least 120 days per year. Half of the outdoor grazing premium (0.50 euros per 100 kilogrammes of milk) is financed from the business, with the premium being partially recovered in the market through higher sales prices for milk products from cows that graze outdoors. The other 0.50 euros per 100 kilogrammes of milk is based on the reallocation of the milk price to the member dairy farmers through a deduction of 0.35 euros per 100 kilogrammes of milk.

Partial outdoor grazing premium

A premium of 0.46 euros per 100 kilogrammes of milk that can be earned if at least 25 per cent of the cattle present on a dairy farm graze outdoors for at least 120 days in each calendar year.

Performance payment

The amount of the performance payment depends on the financial results of FrieslandCampina and the retained earnings policy adopted. With effect from the financial year 2014, FrieslandCampina will distribute 35 per cent of its results to its member dairy farmers in cash in the form of a performance payment. An interim payment can be made in September based on the results of the business and the volume of milk supplied. The interim payment amounts to 75 per cent of the pro forma performance payment for the first six months of the year. Final settlement will take place in April of the following year on the basis of the annual results of the business and the total volume of milk supplied.

Performance price

The amount in euros per 100 kilogrammes of milk, consisting of the milk price, the interest on member certificates, fixed member bonds and free member bonds, and the profit appropriated to the general reserve.

Protein price

The price of a kilogramme of protein. This price is used to calculate the milk price (together with the fat price and the lactose price). With effect from 2014, payments for milk will be based on its protein, fat and lactose content. The protein, fat and lactose content is shown in euros per 100 kilogrammes of milk and in a ratio of 10:5:1.

Seasonal levy

A seasonal levy of 2.30 euros per 100 kilogrammes of milk applies from March to June. No seasonal supplement or levy applies in the months of January, February, July or December.

Seasonal supplement

A seasonal supplement of 2.45 euros per 100 kilogrammes of milk applies from August to November. No seasonal supplement or levy applies in the months of January, February, July or December. The annual effect of the seasonal scheme on the milk price will be settled for the full calendar year with the milk price bill for the month of December in January of the next year.

Settlement

The annual effect of the seasonal scheme on the milk price will be settled for the full calendar year with the milk price bill for the month of December in January of the next year. The deduction and payout for the outdoor grazing scheme takes place once a year in January via the milk price statement for the month of December. The deduction and payout for the Foqus planet scheme will take place in April 2016 for the full calendar year of 2015, via the milk price statement for the month of March.

Special milk

Cow’s milk qualified by the board as special milk on the grounds of Article 9.1 of the Articles of Association.

Special milk flows premium

A premium of 1.00 euro per 100 kilogrammes of milk will be paid in 2016 for supplies of raw milk for the Landliebe brand in Germany. The premium for biodynamic milk is 4.10 euros per 100 kilogrammes of milk.

Volume-based premium

The volume-based premium is a graded premium based on the volume of milk supplied in a calendar year. An advance is paid in the course of the year, based on the annual supplies in the preceding year. The final settlement takes place with the milk price for the month of December, or if milk supplies are discontinued.