Producer-supplier relationships in Germany studied

The supply relationships between milk producers and their dairies are becoming more flexible in terms of binding periods. They are characterised by increasingly voluntary offers of fixed prices and quantities to milk producers, according to a recent study from the ife Institute for Nutritional Science in Kiel, Germany.

“Supply relationships between raw milk producers and milk processing companies in Germany in 2020” has been produced by Professor Holger Thiele at ife. It records the status of the price delivery models used for around 33,800 or 56% of the milk supply relationships between raw milk producers and milk processing companies in Germany at the end of 2020. The representative survey includes data from 52% of the dairies and 79% of the milk volume in Germany.

The comparison of the current figures with the supplier relationships in 2018 shows a high level of dynamism in the area of the fixed price models and minor changes in the two-price and multi-price models.

Fixed price models for the suppliers are voluntary, so the willingness to participate is dependent on the respective price level and the risk attitude of the milk producers.

Two years ago, the German Federal Ministry of Food and Agriculture (BMEL) commissioned a first survey from the ife Institute, which is now being updated on behalf of the Dairy Industry Association (MIV) in Berlin and compared with 2018. The background to this is political considerations to exert legal influence on freedom of contract. The regulations of the European legislation from Brussels offer this to member states as an option.

“We do not believe that the state will achieve income improvements on the farms through other legal regulations on supply relationships,” says Eckhard Heuser, general manager of the MIV.

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