Argentina, Holland Offer Subsidies To Manage Milk Supply

January 22, 2016 09:46 AM
 
Milk glass splash

At a time when global milk supplies are overflowing and free trade agreements are requiring countries to eliminate or scale back dairy subsidies, some co-ops and countries are implementing creative ways to provide extra money to their dairy producers to keep them competitive and thriving or to encourage them to cut back on production.

“While higher milk production benefits the dairy farm, unplanned and unmanaged growth can be quite challenging for a dairy cooperative. Cooperatives often find themselves in a precarious situation when lower milk prices drive higher production because they must buy all of their members’ milk,” says Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management, Seattle. “At the same time, though, they tend to have difficulty processing and finding a good market for the milk in times of oversupply.”

Co-ops generally take one of two approaches to address excessive milk production. “They either carry a stick or offer a carrot on that stick,” says Dorland. Most often quota programs, which are designed to reduce milk flows, fine producers for overproduction.

Paying to not produce          

Recently, the Dutch dairy cooperative FrieslandCampina announced a carrot-type program designed to reduce milk production. FrieslandCampina has offered to pay farms €2 per 100 kg of milk to maintain or reduce production levels. In November 2015, milk production in the Netherlands, which like all EU nations is no longer constrained by quota, rose 13.8 percent over November 2014 levels. Year-to-date output through October production in the European Union climbed 1.5 percent compared with the same period the previous year, which is enough growth to offset a 7.5 percent production decline in Oceania.

“The bonus goes to compensate farms, in part, for the lost absorption of fixed costs that additional milk could have provided,” Dorland states. “While this is a relatively new approach to address overproduction, given current conditions, it will be interesting to see how effective the program is at slowing milk off the farm.”

Paying to produce more

A half world away, Argentine President Mauricio Macri recently met with the nation’s dairy leaders to sign a new commitment to support Argentine dairy producers and promote the dairy industry there.

“The agreement includes provisions for direct payments to farms in addition to access to lower cost loans for struggling dairy operations—all with a keen eye toward increasing Argentina’s dairy exports over the near term,” says Dorland. Specifically, the deal includes a 40-peso per liter of milk subsidy for the first 3,000 liters of milk produced each day during the first-half of 2016. That is equivalent to a 33 percent increase in pay of 36,000 pesos ($2,430) per producer, she adds.

“At a time when world milk powder coffers are bursting, new subsidies to dairy producers suggests there is no end in sight for current trends,” says Dorland. “While welcome news for Argentina’s dairy industry, the move likely will ring discord for dairy producers in the United States, Australia, and New Zealand.”

Back to news


 

RELATED CONTENT

Comments

 
Spell Check

Mrs Rose Williams
Paris, GU
4/6/2018 07:39 AM
 

  Private Lender Avit Investment Authority. Greetings to you by ADIA. We are a France-Paris based investment company known as Avit Development Investment Authority working on expanding its portfolio globally and financing projects. We would be happy to fund and invest with you in any profitable project if you have any viable project we can finance by making mutual investment with you. If you are interested, kindly contact us on:avitinvestmentauthority2@gmail.com for more details. Looking forward hearing from you soonest. Yours truly, Mrs Rose Williams (Personal Assistant) Avit Development Investment Authority(ADIA) 501 Avenue Montaigne,75008 Paris-France Paris-France.Avit Development Investment Authority (ADIA)

 
 
FIFOCapitals@gmail.com
NY, AK
5/6/2018 05:36 AM
 

  Do You Seek Funds To Pay Off Credits and Debts? { FIFOCapitals@gmail.com } Is Here To Put A Stop To Your Financial Problems. We Offer All Kinds Of Loan (Personal Loan, Commercial Loan, etc.) We Give Out Loan With An Interest Rate Of 1.00%. Interested Applicants Should Contact Us Via Email: FIFOCapitals@gmail.com Please Fill the Application Form Below: - Complete Name: - Loan Amount Needed: - Loan Duration: - Purpose Of Loan: - City / Country: - Telephone: - How Did You Hear About Us: If You Are Interested To Get A Loan Then Kindly Write Us With The Loan Requirement. Please, Contact Us via email: FIFOCapitals@gmail.com

 
 
Fachtna O'Mahony
salt lake, UT
6/22/2018 02:27 PM
 

  We are Ireland based major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale.We are one of the leading Financial instrument providers with offices all over Europe. we always deliver on time and precision as Set forth in the agreement. You are at liberty to engage our leased facilities into trade programs, project financing, Credit line enhancement, Corporate Loans (Business Start-up Loans or Business Expansion Loans), Equipment Procurement Loans (Industrial Equipment, Air crafts, Ships, etc.) as well as other financial instruments issued from AAA Rated bank such as HSBC Bank Hong Kong, HSBC Bank London, Deutsche Bank AG Frankfurt, Barclays Bank , Standard Chartered Bank and others on lease at the lowest available rates depending on the face value of the instrument needed, Our Terms and Conditions are reasonable. DESCRIPTION OF INSTRUMENTS: 1. Instrument: Bank Guarantee (BG)/SBLC (Appendix A) 2. Total Face Value: 10M MIN to 50B MAX USD or Euro 3. Issuing Bank: HSBC, Deutsche Bank Frankfurt, UBS or any Top 25 . 4. Age: One Year, One Day 5. Leasing Price: 4+ 2% 6. Sale Price: 32+2% 7. Delivery by SWIFT . 8. Payment: MT103-23 9. Hard Copy: Bonded Courier within 7 banking days. If you have need for Corporate loans, International project funding, etc. or if you have a client that requires funding for his project or business, We are also affiliated with lenders who specialize on funding against financial instruments, such as BG, SBLC, POF or MTN, we fund 100% of the face value of the financial instrument. Inquiries from agents/ brokers/ intermediaries are also welcomed; do get back to us if you are interested in any of our services and for quality service. Name:Fachtna O'Mahony E-mail:paciolifinancialservicesltd@gmail.com Skype id:paciolifinancialservicesltd@gmail.com

 
 

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close