The dairy industry expects significantly higher prices
The dairy industry assumes that the price difference will be clearly visible in the second half of the year.
There is no fixed time frame for price changes in dairy products. The dairy industry assumes that trade will continue to increase depending on the duration of the supply contracts.
Updated on: 06/21/2022, 17:47
Mechernich. Consumers will be faced with significant price increases for many dairy products in the coming months.
“Overall, I personally expect higher food prices, especially in the milk sector,” said Hans Stocker, President of the North Rhine-Westphalia State Association of Dairies in Mechernich, west of Bonn. He believes it will hit shelves in the second half of the year.
For milk and milk products in the lowest price range, there are no longer any uniform key dates and conditions for new supply contracts between individual dairies and retail chains. “At the moment we can see on the market that prices are moving at different speeds,” Stocker explained.
Retail chains changed the terms of their contracts
The price of butter has already risen sharply and very quickly. It also shows that there are many new contracts for other dairy products that have not yet been implemented on the market. The fact that individual dairies have already raised the dairy farmer price by 50 cents per kg of raw milk indicates new contracts with higher deals.
Previously, the industry had a May 1st and November 1st deadline for semi-annual supply contracts in the minimum price range for milk and many dairy products. Retail chains then changed their contract terms. The prices paid to farmers reached an average of 43 cents per kg of raw milk in the first four months of the current year, as reported by the state association on the situation in North Rhine-Westphalia.
rising production costs
The prices paid will thus be on average a third higher than in the previous year. However, the additional income is offset by sharply rising production costs, emphasized the state association with regard to the costs for fertilizer, feed and fuel. It also arouses worries about the future and existence. Milk production is at its peak in Germany. With a minus of 2.2 percent in the first four months of 2022, this could mean a small trend reversal.
Managing director Rudolf Schmidt said that consumer reaction to the milk shelves may already have been due to high food inflation. The sharp rise in high-priced organic and hay milk products as well as plant-based milk alternatives seems to have stalled for some time.
According to the information, the program is intended together with the food trade for the labeling of animal husbandry on dairy products. Apparently, the introduction of the first dairy products into the trade will be postponed by a few weeks or months, “since this will probably be associated with price increases and these are probably not feasible at the moment,” said Schmidt.
The gas supply for dairies is also a big issue. “80 to 90 percent of the German dairy industry is dependent on gas.” Some parts can be converted into other energy sources such as oil. For this, however, storage capacities must be created and building permits obtained. So that doesn’t happen overnight, Schmidt clarified.
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