Costs not covered in Germany, says BAL
The average price paid to dairy farmers in Germany in last year in October 2013, amounting just under €0.42 per kilogram, does not cover current production costs, according to a cost study carried out by BAL – the German Office for Agriculture and Agricultural Sociology. For the same period, production costs amounted to just over €0.44 per kilogram, resulting in a gap of around €0.02 per kilogram. The BAL study on production costs was carried out on behalf of the European Milk Board and MEG Milch Board. The study showed production costs in three different regions of the country. In the southern region (Saarland, Bavaria, Baden-Württemberg, Rhineland-Palatinate, Hessen) productions costs amounted to €0.49/kg of milk, where as in the eastern regions of Thuringia, Saxony, Saxony-Anhalt, Brandenburg and Mecklenburg-Vorpommern, costs were lower at just under €0.43/kg. Meanwhile, in the northern region of North Rhine-Westphalia, Lower Saxony and Schleswig-Holstein, the average was between €0.38 and €0.39/kg. For October 2013 the price/cost ratio showed only 95% of the costs were covered, while overall, only 87% of total 2013 costs were covered. That being said, in 2012 the average milk price in Germany was slightly under €0.33/kg, and in 2010 it was less than €0.26/kg.
The study is based on data of the European Commissions’ Farm Accountancy Data Network (FADN). It uses price indices for agricultural means of production such as feed, fertiliser, seed and energy from the German Federal Statistical Office. Additionally, a wage variable is used which calculates the work capacity of farm managers and their family members.
On the basis of this study, the MEG Milch Board has developed the Milk Marker Index (MMI), which records the current progress in production costs (using base year 2010 = 100 points). The MMI for October 2013 is 106 points. The results of the index are published on a quarterly basis along with a price/cost ratio showing the relation between officially recorded farm-gate prices for raw milk and milk production costs
