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FC to pay for every litre 'not produced'

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Staff Writer | September 29, 2016
European dairy co-operative FrieslandCampina (FC) has announced it will pay its members around 8ppl (10 eurocents per kg) to reduce milk production between October 2016 and March 2017.
Dairy   FC has increased its milk price by a significant 17%
If any of the participating farmers have also applied for the EU’s milk production reduction scheme, they could receive around 20 pence for every litre “not produced”.

However, FC has also increased its milk price by a significant 17% over the last two months, taking it to 24ppl (29.25 eurocents per kg) from 1 October. This could leave some European producers weighing up which option is best – cut litres or produce them?

FC says its scheme aims to help farms reduce phosphate production in anticipation of regulations being introduced in the Netherlands. However, the co-op’s members in Germany and Belgium can also participate and overall FC aims to reduce production by 146m litres between October and March.

This would theoretically equate to a 0.2% reduction in EU-28 milk production, compared to the same period in 2015/16.

Fonterra has announced a further 10.5% rise in its 2016/17 forecast farmgate milk price, to approximately 21-22ppl (NZ$5.25 per kilo of milk solids). This follows its recent increase in August and may be considered a positive indication of the improving market situation.

Fonterra says the move reflects the continuing decline in milk production, while demand has remained stable. The processor acknowledged that the market remains volatile and said it will continue to review its forecast milk price throughout the season.