Dutch dairy farmers earn 30% less for milk but shop prices drop only 5%

cows field summer grassDutch farmers are being paid 30% less for milk than they were a year ago, the national statistics office CBS said on Tuesday.

However, consumer prices have only gone down 5%, the CBS said.

‘The price of milk in shops is not only determined by the price the farmer is paid and the cost of production. Other factors such as transport costs and long-term supermarket contracts also play an important role,’ the CBS said.

The ending of European milk quotas and falling dairy exports have also had an impact on prices and led to oversupply.

Last month, Rabobank recommended Dutch dairy farmers wait before making new investments and consider temporarily scaling back milk production because of the sharp drop in milk prices.

The bank, which is the main source of finance for the Dutch dairy sector, says it expects milk prices will drop further in the coming quarter and that many farmers are already in financial difficulty.

And last week, the Financieele Dagblad said Dutch dairy companies are stockpiling cheese because low milk prices since the abolition of quotas have hit cheese prices as well.

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