B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 1 Branchenorganisation Milch,...

BRANCHENORGANISATION MILCHBO MILCH - IP LAIT - IP LATTE

1Branchenorganisation Milch, Belpstrasse 26, 3007 Bern [email protected] / www.ip-lait.ch

Dairy Press Tour SwitzerlandSunday 27 October 2013

The Abolition of Milk Quotas and the Challenges Involved

Dr. Markus Zemp

President BO Milch



Source: SFSO / FOAG

Breakdown of the Agricultural Sector in 2011



Export-Dependence of the Swiss Dairy Industry

Sources: TSM, SMP, VMI

Import430 Mio. kg

Export940 Mio. kg

Domestic Milk Production: approx. 3.4 billion kg

Inland need : approx. 2.9 billion kg



The Milk Branch Organisation

Association set up in June 2009

The Milk Branch Organisation represents the entire value-added chain

According to its statutes, the purpose of the Milk Branch Organisation is to strengthen the efficiency of its members in the Swiss dairy industry by maintaining and promoting added value and market share in domestic and foreign markets

Membership:

4 national organisations of milk producers and commercial and industrial milk processors

24 regional organisations of milk producers

5 regional organisations of commercial milk processors

11 industrial milk processing companies

2 retailers



Market-Regulation Measures taken by the Milk Branch Organisation

Standard contract for the first and second purchase of milk

Aim of the standard contract:

To improve legal and contractual security at all levels according to the corresponding article in the statutes

Key elements in the standard contract:

Agreement on volume, price and duration of contract

Segmentation of milk purchasing

Obligations on the part of the purchaser and the vendor

Reference to guideline prices for the individual segments

Transparency between the contracting partners



Segmentation of Milk Purchasing

Aim of the segmentation

To ensure payment for untreated milk that corresponds to differing basic conditions depending on the market segment;

To ensure that Swiss milk, in particular surplus supply, is processed and marketed in a regulated fashion;

To reduce price pressure on the stronger market segments from the point of view of added value;

To ensure that market trends are clearly passed on and to promote market-orientated behaviour among all players in the added-value chain right down to the level of individual milk producers.



Segmentation of Milk Purchasing

A, B and C milk segments

Segment Use of milk

A-segmentDairy products with considerable added value (protected or subsidised)

B-segmentDairy products with limited added value or greater competition (not protected and not subsidised)

C-segment Regulating or “clearance” products, not subsidised



Trend in Milk Production

Source: TSM



Source: TSM

Number of Milk Producers According to Volume of Production / 2012 (excl. summer grazing)

Mengenangaben in kg

Me

ng

en

an

ga

be

n in

To

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Trend in Total Milk Production in Switzerland since 2005

Jahr Gesamtmenge in Tonnen

Differenz in % zu Vorjahr

Index (2005 = 100)

2005 3‘203‘222 -0.27 100.00

2006 3‘204‘972 0.05 100.05

2007 3‘260‘088 1.72 101.78

2008 3‘423‘048 5.00 106.86

2009 3‘415‘352 -0.22 106.62

2010 3‘437‘622 0.65 107.32

2011 3'471‘973 1.00 108.39

2012 3‘470‘831 -0.03 108.35

Source: TSM



Trend in Producers’ Prices in Switzerland and the EU (LTO) January 2010 to July 2013

Sources: BLW / LTO



Guideline Prices in Cents per Kg Milk

2012

Jan. Feb. März Apr. Mai Juni Juli Aug. Sept. Okt. Nov. Dez.

A-segment -- 66.0 66.0 Kein RP Kein RP

B-segment 55.8 55.6 54.2 53.1 51.6 51.3 53.3 53.7 55.9 57.6 58.1 58.3

C-segment 33.2 32.2 29.8 27.4 24.2 22.8 25.4 26.2 28.9 32.0 33.0 33.7

2013

Jan. Feb. März Apr. Mai Juni Juli Aug. Sept. Okt. Nov. Dez.

A-segment Kein RP 66.0 69.0 69.0 69.0

B-segment 57.5 58.3 57.8 58.5 61.3 63.0 62.0 63.1 64.0 63.2

C-segment 32.8 33.8 33.1 35.1 40.4 43.4 41.9 43.3 44.0 43.4



Market Relief and Export Promotion by the Milk Branch Organisation

Source: BO Butter



Results

The Milk Branch Organisation is the common platform for the entire added-value chain in the dairy industry

There are major differences in interests and the parties involved have to learn to collaborate

Milk prices fluctuate considerably depending on processing and region (distance from market).

Despite expansion of milk volumes, it has been possible to maintain the difference in milk prices in comparison with the EU



Results Major structural changes

The suckler cow option is attractive (protected market)

Milk volumes since abolition have risen by 8.4%, have now levelled out, although some dairy farms are still increasing their milk yield

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