Regional marketing of milk

Background and Objective

The milk market is characterised by volatile prices, the crises of recent years and political measures that should provide milk producers with liquidity in times of low milk prices. In the past, the European Commission has often devoted itself to the milk market and helped to alleviate the crises with the expert group on milk, the milk package and supporting measures such as the special milk aid or the milk quantity reduction measure. Nevertheless, some farms were unable to fulfil their payment obligations and had difficulties in maintaining their liquidity. Although the market has recovered somewhat at the moment and milk prices are above 30 cents per kilogram of milk, many farms are powerlessly awaiting the next milk crisis.

In addition to the dependence on the payment prices of dairies, the increased interest of consumers in specific product characteristics poses new challenges for milk producers: GMO-free feed, production free of glyphosate or milk from grazing. Conversions that entail additional costs without a higher milk price being certain. But the increased attention to food production conditions also hides an opportunity for milk producers: the regional marketing of their products directly to the consumer - less dependent on the dairy. In times of low milk prices, this diversification can help to maintain one's own liquidity.

Approach

The Thünen Institute has been commissioned by the Federal Ministry of Food and Agriculture to investigate the factors influencing the success or failure of regional milk marketing.

The aim is to gather all relevant factors and to analyse their influence on the success or failure of dairy farms that process and market their own milk.

Data and Methods

To determine relevant influencing factors, interviews are conducted with farm consultants, employees of chambers of agriculture and associations and farmers who market their products regionally. The survey covers selected milk production regions that are important for Germany. We use various qualitative and quantitative methods to evaluate the data collected and produce a report that is accessible to everyone. We provide milk producers who want to take the step into regional marketing with an instrument to evaluate the strengths and weaknesses of their individual situation and to recognize possible weak points at an early stage.