The Netherlands: RFC updates calculation of the guaranteed farmers milk price

The Holland headquartered dairy cooperative Royal FrieslandCampina updates the calculation of the guaranteed farmers milk price since the beginning of 2020. The guaranteed price is the price that RFC guarantees to pay to the members for the milk supplied. RFC applies two guaranteed prices: one guaranteed price for regular farms and a guaranteed price for organic and biodynamic farms. The old guaranteed price corresponded with the average prices for farm milk for a number of dairy companies and countries in North-west Europe, including subsequent payment, reservations in name, cooperative premiums and deductions. The old guaranteed price was based on public sources and is established independently of the result of FrieslandCampina. The change in the calculation means that FrieslandCampina will no longer take into account a number of deductions and premiums that reference companies pay when calculating its guaranteed price. Because of the accumulation of premiums, the FrieslandCampina guaranteed price was in danger of losing its conformity with the market in the long term, according to RFC. The old guaranteed price system used by RFC was based on the maximum premiums and deductions at the reference companies, whereas not all dairy farmers of these companies receive these premiums. Apart from this, FrieslandCampina also pays premiums itself, such as for sustainability, VLOG and grazing, to mention a few. RFC states that by no longer including the deductions and premiums for pasturing, VLOG, sustainability and not milk-related premiums in the calculation of the guaranteed price, FrieslandCampina will make sure that its guaranteed price remains in conformity with the market. The old guaranteed price was published per 100 kilos of milk with 3.4 percent protein, 4.41 percent fat and 4.51 percent lactose. In the past years, the milk has gradually become richer in proteins and lactose contents and less in fat. As a result of this, the difference between the published guaranteed price and the actually paid milk money gradually increased. To set things right, the standard contents have be adjusted to the actually supplied contents in 2019 as from 2020. So the new FrieslandCampina guaranteed price applies to 100 kg of milk with standard contents protein (3.57%), fat (4.41%) and lactose (4.53%), exclusive of VAT.

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