The German Milk Board (MEG) has developed its own Roadmap Milch & Mark as a guide for the milk trade after the end of quota.

“The current milk price-definition gives to the milk producers the bulk of the market risk. The price of milk is a residual, which allows the food retail and milk processing companies to use their market position for securing their margins and to deny dairy farmers a sustainable milk price,” says MEG CEO Peter Guhl.

According to the roadmap, milk sale contracts must contain at least the four following bindings: period, milk yield, quality and price with corresponding price increases and reductions. The milk producer groups and their associations also need to be better promoted, so it will strengthen them in the market.

The practice of tender through cooperative obligation is no longer appropriate and prevents the milk pricing being in accordance with market laws, claims MEG. The free market of raw milk in Germany can continue to develop, if the tenders are purely market-based. The road to the contract-based milk marketing should not be denied co-operative milk producers in a liberalized market environment.

“If the German dairy farmers face free competition from 1 April 2015, this must also apply without exception to the dairies,” Guhl says. “Dairy farmers are not second class business partners. They must be able to sell their milk to the highest bidder.”

The board is aiming for a constructive dialogue with all involved parties in the dairy market in the coming months, Guhl states.

dairyindustries.com