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Belgian farmgate milk price covers only 65 percent of production costs

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Staff Writer | September 6, 2017
A cost study shows that the costs of milk production in Belgium in 2016 were 41.37 cents/kg.
Belgian farmgate milk
Dairy   Farmgate prices fell
As the farmgate prices for milk were only 26.70 cents, this means only 65% of production costs were covered in 2016.

The study, jointly commissioned by the European Milk Board (EMB) and the Belgian Dairy Farmers’ Association (Milcherzeuger-Interessengemeinschaft - MIG), calculates the current costs of milk production based on EU data and also takes into account the work input of the farm manager and family members working on the farm.

Because farmgate prices fell during the milk crisis of 2015, there was a 35% shortfall in coverage of production costs. In the last five years, in no year has a farmgate price level been achieved that would have assured the dairy farmers of at least an adequate income.

Manifestly lower depreciation and interest paid show that scarcely any new investments were possible.

Furthermore, the subsidies paid out to dairy farms in 2016 were only 2.27 cents a kilo, meaning they had decreased by more than 2 cents/kg milk in the last three years.

Given the price-cost gap of almost 15 cents, the subsidies can barely help secure the farms’ annual income.

The current study makes it clear that the milk production costs must be covered by the farmgate price.