Dairy products no longer have fixed deadlines for price changes. The dairy industry assumes that there will be further increases in trade depending on the term of the supply contracts.
Consumers will have to reckon with significantly increasing prices for numerous dairy products in the coming months.
“In the end, I personally expect higher food prices across the board, especially in the milk sector,” said the chairman of the North Rhine-Westphalia State Dairy Industry Association, Hans Stöcker, in Mechernich west of Bonn. He assumes that this will become visible on the 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 terms for new supply contracts between the individual dairies and retail chains. “But at the moment we are seeing in the market that prices are being raised at different speeds,” explained Stöcker.
Retail chains changed the terms of their contracts
The butter price has already risen quickly and very sharply. This also suggests that there are new contracts with higher degrees for other dairy products and these have not yet been implemented in the market. The fact that individual dairies have already raised the payment prices for dairy farmers to 50 cents and more per kilogram of raw milk points to new contracts with higher deals.
The industry used to have deadlines of May 1st and November 1st for six-monthly supply contracts for milk and numerous dairy products in the lowest price range. The retail chains then changed the terms of their contracts. The price paid to farmers rose to an average of 43 cents per kilogram 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.
Extremely rising production costs
This means that the payout prices would be on average a third higher than in the previous year. However, the additional income is offset by extremely rising production costs, the state association emphasized, referring to the costs of fertilizer, fodder and fuel. This also leads to future and existential worries. Milk production in Germany has peaked. With a 2.2 percent decline in the first four months of 2022, it could mean a small trend reversal.
The high inflation in food may have already led to a reaction from consumers on the milk shelves, said Managing Director Rudolf Schmidt. The steep growth in the higher-priced products organic and pasture milk as well as in plant-based milk alternatives seems to have stopped for the time being.
According to the information, the program with the food trade stands for the labeling of animal husbandry on dairy products. Apparently, the introduction of the first milk products in retail will be postponed by a few weeks or months, “because that will probably be associated with price surcharges and they are probably not that feasible at the moment,” said Schmidt.
Gas supply is also a key issue for dairies. “80 to 90 percent of the German dairy industry is dependent on gas.” Certain parts could be converted to other energy sources such as oil. But for this, storage capacities would have to be created and building permits would have to be obtained. This is therefore not possible overnight, Schmidt clarified.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
