Milk prices rise, but how long do the companies stay in the game?

Milk prices rise, but how long do the companies stay in the game?

in northern Germany is currently a positive mood among the milk producers in the air. The current milk price exceeded the 50 cents per liter brand, which gives farmers hope. This is the longest phase since the 1980s, in which long-term milk prices can be observed. Nevertheless, there are challenges that need to be mastered. As reports elite magazine, investments are stagnating in new cowstalls throughout Germany. Many companies are forced to continue to operate old, copied stables, while compliance with rising standards creates uncertainties.

Currently there are even some 200 cow companies, and despite the high milk prices, we observe a decline in cow numbers, especially in the north and northwest of Germany. High prices may be attractive at short notice, but they also preserve structures that are not competitive. In order to secure the future of milk production, farmers continuously need good revenue for milk and meat. In addition, relief in building law as well as fewer bureaucracy and production requirements are of crucial importance. Potential court successors long for clear signals from politics and trade.

animal welfare and milk prices: an exciting interaction

Another important aspect that influences milk prices is the increasing demands on animal welfare standards. A current study by the IFE Institute for Nutritional Economy Kiel examines the financial effects of higher animal welfare in milk production. According to [Milchland] (https://milchland.de/hoehere-tierwohlstobards-leaked-milk prices-besten/) there is a growing consumer interest in animal welfare, but the transparency suffers from the large number of different labels.

The study shows that the introduction of better animal welfare standards for the companies causes additional costs. For the entry level of animal welfare labels, farmers have to expect an average of 2.28 cents per liter, while the premium level even costs 2.64 cents. The dairies also have to deal with additional costs, which can be between 5.7 and 18.9 cents per liter depending on the companies. A uniform, state -supported animal welfare label could help master these challenges and increase the number of consumers ready for payment.

market shares and consumer trends

The investigation also includes 159 dairy companies in Germany, of which 64 companies produce drinking milk. Only 10 to 12 of these companies process raw milk with higher animal welfare standards. While the shares of raw milk with these higher standards are still low, they show an upward trend of how the analysis impressively illustrates. In 2019, the production of drinking milk in Germany was 4 billion liters, of which 3.3 billion liters went to the food retail trade.

The total consumption of private households, however, shows a declining tendency that has decreased by about 2 percent annually in recent years. From 2018 to 2019 in particular there was a decline of 5.3 percent - a trend that should stimulate the dairies and farmers to think about how they can make their products more attractive to consumers.

The future of milk production in northern Germany not only depends on the prices, but also on the associated standards and the ability to adapt to the changing requirements of the market. The next time will show how the industry reacts to these challenges.