The dairy industry expects much higher prices | Free press

Dairy products no longer have a set time limit for price changes. The dairy industry assumes that, depending on the duration of supply contracts, there will be further increases in trade.

Mechernich.

Consumers will face significant increases in the price of many dairy products in the coming months.

“On the whole line, I personally expect higher food prices, especially in the dairy sector,” said the chairman of the National Association of the North Rhine-Westphalia Dairy Industry, Hans Stöcker, in Mechernich, west of Bonn. It assumes that this will become visible on store shelves in the second half of the year.

In the case of milk and milk products from the lowest price range, there are no longer uniform key dates and conditions for concluding new supply contracts between individual dairies and retail chains. “Right now, however, we are seeing prices in the market rising at different rates,” explained Stöcker.

Retail chains have changed the terms of their contracts

The price of butter has already risen rapidly and rapidly. It also suggests that there are new contracts with higher academic degrees for other dairy products that have yet to be rolled out to the market. The fact that individual dairies have already raised payment prices to dairy farmers to 50 cents and above per kilogram of raw milk indicates new contracts with higher contracts.

There were deadlines in the industry on May 1 and November 1 for six-month contracts for the supply of milk and many dairy products in the lowest price range. Retail chains then changed the terms of their contracts. The price paid to farmers has risen to an average of 43 cents per kilogram of raw milk in the first four months of this year, according to the state association dealing with the situation in North Rhine-Westphalia.

Extremely rising production costs

This means that wage prices would be, on average, a third higher than in the previous year. However, the additional income is compensated by the extremely rising costs of production, the state union emphasized, referring to the costs of fertilizers, feed and fuel. It also leads to future and existential worries. Milk production in Germany is at its peak. With a 2.2% drop in the first four months of 2022, this could signal a slight reversal of the trend.

High food inflation may already have triggered consumer reactions on the milk shelves, said managing director Rudolf Schmidt. The surge in prices for more expensive products, organic and pasture milk, and plant-based alternatives appears to have stopped for the time being.

According to the information, the program with trade with food means marking of livestock farming on dairy products. Apparently, the retail launch of the first dairy products will be postponed by a few weeks or months, “as this will likely involve price surcharges and probably not quite that feasible right now,” said Schmidt.

Gas supply is also a key issue for dairies. “80 to 90 percent of the German dairy industry is dependent on gas.” Some parts can be turned into other energy sources, such as oil. Without it, it would be necessary to create storage capacity and obtain building permits. Therefore, it is not possible overnight, explained Schmidt. (dpa)

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