(Bram Prins | 2016-06-17) Nearly all farmers around the world encounter problems with the current low milk prices, except for farmers producing organic milk or special products which have their own prices.
As written several times before prices of milk as a commodity all over the world have a tendency to reach the same level. As long as there are strong protected markets without the need for exporting your milk it is not easy to change this. Blaming consumers and retailers is no solution. The dairy consumer prices are market driven.
Some lessons I learned during the years are: in a surplus market prices are going down. The only way to influence this will be by creating a shortage of consumer products. To arrange this, we need to develop and provide special products and not only as a niche market. Regions with high cost prices of producing milk most of the time have entrance to knowledge and possibilities for producing high value products. One example: the former EU extended in last century by low cost countries like Poland and Romania. As soon those countries entered the EU they experience the same possibilities for producing “Western products”. Countries like Romania and Poland bought new equipment and hired western management and within five years they produced western products, of which most of the time commodities.
Consequently, if high cost countries are not producing more cost efficient and effective and offer new market driven products, they will lose market.
Hence, farmers must be prepared to put pressure on the co-operatives. Most important you have to invest time and money-wise.
When investing a lesson will be to keep the lead in farmers’ hands. Be aware if attracting foreign capital, it is 100% sure that shareholders require interest. Learn your lesson from Australia now! Keep in mind that even big co-operatives are not farmer friendly anymore: business is business.
My opinion is that farmers themselves are responsible for their market. This only can be done by looking for new opportunities and taking the lead by yourself with reliable partners.
For me it is a challenge to realise this with our GDF partners.