We are still in a difficult situation – that is undeniable. We still haven’t overcome the effects of last year’s drought. Many farms are struggling with liquidity. And the milk price is still too low. We were all expecting the price to increase and instead, it has fallen since the beginning of the year. Additionally, many are unhappy about the milk payments at our own dairy.
In 2018, we were just around the average in northern Germany but we have been below that level since the start of the year. We found ourselves in a similar situation in summer 2018 but we managed to balance that out through the rest of the year. We have to do that now, too, and that’s a clear order for the management.
We won’t get around managing our costs better though, because bear in mind that DMK has to bear the loss of a billion kilos of milk. We have known about that loss for two years and many measures have been introduced since then. Wage models are being implemented at Arla and Friesland Campina, for example. And we have taken on the Alete and Milasan brands into our product range as they are a perfect match. In Strückhausen we started operations at a high- tech baby food plant and we have modernised the MILRAM brand. We will still be paying for these measures this year, but they will help towards paying a better milk price in the future.
We spent a sum in the good triple- digit millions to fully reorient the company. That was important to help transform a dairy that in the past focused solely on mass and mergers, to create a food manufacturer fit for the future. That means one capable of taking a leading role in the market amid the challenges of changing consumer behavior, new trends and sustainability. As one of the biggest food producers in the country, that task is big but it is necessary.