Swiss depend on EU

The EU is the main trading partner of Switzerland. An estimated 82% of Swiss cheese exports are destined for this market, amounting to 30% of Switzerland’s 2014 production.
Therefore, developments in the European milk market push the Swiss price for the raw material (raw milk) down. This means that Swiss producer price for milk is influenced by EU price developments and on the world market. The EU is one of the world’s largest exporters of dairy products, especially cheese. The creation of supply and demand of dairy products worldwide thus determines the price for the raw material (raw milk) in the EU, and also in Switzerland.
Since 2010, there has been a parallel development of milk prices between Switzerland and the EU. Between January and April 2015, the average nationwide producer price amounted in Switzerland to 57.14 rappen/kilo (100 rappen = 1 CHF), which compared with the same period last year is a decrease of 9.28 rappen/kilo. In the EU, this decline was slightly more pronounced (declining – 9.91 rappen/kilo to 38.16 rappen/kilo for the fixed Euro-CHF exchange rate).
The background for the current decline in producer price for milk in Switzerland is, among others, the influence of supply and demand in the global dairy market and lower prices for milk products (especially of milk powder and butter) on the world markets. In addition, the abandonment of the ‘euro lower limit’ further depressed the Swiss price for milk.
During the first months of this year a convergence between milk prices in Switzerland and the EU can be found. In April 2015 the differential between Switzerland and the EU was at fixed exchange rate (EUR 1 = CHF 1.20) 17.81 rappen/kilo, while in January 2006 this figure was 37.32 rappen/kilo.