FrieslandCampina reports milk price rally

- Last updated on GMT

Related tags: Denmark, Milk

FrieslandCampina has announced the biggest monthly increase in the guaranteed price for the milk supplied to its farmers so far this year.

For the month of May the guaranteed price is €31.50 per 100 kg of milk, which is €2.25 higher than in April and €6.25 higher than in May 2009.

After the slump in dairy producer prices last summer, there was a strong recovery at the end of the year. For example, in December 2009, the FrieslandCampina price per 100kg of milk was €32.75.

Since the New Year the FrieslandCampina price weakened and then hovered around €29 before the latest rally.

Explanation

FrieslandCampina said: “The continuing rise in the prices of raw milk in Germany, Denmark, the Netherlands and Belgium accounts for most of this increase.

“There is also a positive correction, because the level of prices in these countries in recent months proved to have been higher than expected when the guaranteed prices were fixed for those months.”

The guaranteed price is the price that FrieslandCampina guarantees to pay its member-dairy farmers for the milk they deliver in the relevant period.

Calculation

Movements in the guaranteed price give a good indication of the direction of the market as it linked not to financial performance at FrieslandCampina, but rather the average milk price in different countries.

More accurately, the guaranteed price is based in the average price for Germany, the price of Arla Foods in Denmark, the prices of Bel Leerdammer, Cono Kaasmakers and DOC Kaas in the Netherlands and the price of Milcobel in Belgium.

The milk price FrieslandCampina pays its member dairy farmers consists of the guaranteed price and an annual performance payment.

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