FC pays farms to cut litres… and lifts its milk price

Published 28 September 16

European dairy co-operative FrieslandCampina (FC) has announced it will pay its members around 8ppl (10 eurocents per kg) to reduce milk production between October 2016 and March 2017. If any of the participating farmers have also applied for the EU’s milk production reduction scheme, they could receive around 20 pence for every litre “not produced”.

However, FC has also increased its milk price by a significant 17% over the last two months, taking it to 24ppl (29.25 eurocents per kg) from 1 October. This could leave some European producers weighing up which option is best – cut litres or produce them?

FC says its scheme aims to help farms reduce phosphate production in anticipation of regulations being introduced in the Netherlands. However, the co-op’s members in Germany and Belgium can also participate and overall FC aims to reduce production by 146m litres between October and March. This would theoretically equate to a 0.2% reduction in EU-28 milk production, compared to the same period in 2015/16.

In reality there is likely to be some overlap with litres included in the EU-wide reduction scheme, which involves much larger volumes. Therefore the impact of FC’s scheme on milk volumes at whole-EU level could be relatively small.