German dairy farmers struggle through milk slump

If you thought only Kiwi farmers were hurting from low dairy prices think again. Gerald Piddock visited Germany to find their farmers are also struggling. By GERALD PIDDOCK
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Every day that German dairy farmer Christoph Lupschen enters his dairy barn to check on his herd, he knows he is making an economic loss.
It’s a scenario New Zealand dairy farmers know well after two years of low prices. For Germany, the European Union’s largest milk producer, the issues are the same.
Lupschen says some German farmers have left the industry because of low milk prices, but most would try and ride it out.
«They want to continue, but now the situation is so bad that some cannot continue,» he told told about 20 international journalists visiting his farm during the International Federation of Agricultural Journalists’ Congress in Bonn, Germany. «It’s the first time that I can remember that it is a situation that farmers must stop. It’s the first time in the last 50 years.»
Lupschen says the growth in the dairy industry the past few years had been reliant on capital from banks and German farmers are now struggling to pay back those loans.
Christoph and wife Birgit farm at Lohmar, southeast of Cologne in western Germany in a barn-style system, milking 220 dairy cows. They also farm 450 heifers and run 100 breeding bulls.
It costs him €0.35 (NZ$0.54) to produce a litre of milk and he receives €0.21 (NZ$0.33) from the company he supplies, the DMK Group.
Germany is the largest milk producer in the European Union, with production worth €15 billion in 2013. Almost all of the milk is processed for drinking, butter, yoghurt, cheese and other products. Almost half of these products are exported, with 84 per cent going to other EU countries. Russia, China and the United States are also important markets for Germany.
As an EU citizen, he believes it’s best for Germany to stay in the EU, despite the glut in the milk price.
«It has many advantages and we forget that we have had no war here in Middle Europe for 70 years. If you ask me as a farmer, I say close the border today. We have the highest costs for our product and now we compete all over the world. There’s no chance for us.»
Lupschen says he has no interest in receiving a EU subsidy because it has done little to help German dairy farmers.
«I want nothing from Brussels. For me it’s completely the wrong thing to take money from Brussels. Every euro you take from Brussels, you must [give it back] for rent, for land. It’s not the right way.»
This is despite the EU delivering another support package for struggling farmers.
Instead, he believes their dairy industry, with its  higher production costs, needs to focus on specialty products such as cheese, rather than compete against New Zealand, Australia and the United States whose systems had lower production costs and could produce commodity milk powder.
«It’s my opinion that we must change our thinking in the middle of Europe.»
The DMK Group was badly affected by the Russian embargo.  Lately it merged with the Netherlands’ second-largest cheese manufacturer, DOC Kaas, a decision Lupschen supports because it’s a brand well respected in Europe.
The two companies together process about 8 billion kilograms of raw milk every year.
He says the problems within the dairy industry are largely self-inflicted.
«It’s made by ourselves, by the dairy industry, not by the political things and not by the consumer. We must produce the milk the consumer needs and if you produce too much milk, the price goes down.»
The world’s farmer-owned dairy companies should take some responsibility for the current situation, adapt more quickly to what the consumer and market wants and reduce production until prices improve.
«It is easy to do. The milk companies must take the first step. I believe that milk production in Germany must be lower and we must take that first step to bring it down.»
Lupschen is fortunate to earn money breeding and exporting high genomic dairy cattle and selling electricity generated by an on-farm biogas facility he bought.
He estimates money from his biogas plant would be about half of his income. The other half comes from his breeding programme.
The low milk price has affected his cattle values. At the first European sale of the year the average price for the 100 high-genomic heifers he sold was €5200 (NZ$8094).
«In [a] normal situation two years before, the average price was €1000 higher.»
He knows of a farmer colleague who exited the industry because of the downturn and who received the «terrible» price of €700 (NZ$1089) per cow for his milking herd. «These are good cows producing 10,000 litres milk production per year.»
He began the breeding programme after being impressed by cows he saw on a visit to Canada.
Over the past 20 years he has shifted his herd genetics from an easy-management crossbred cow with holstein, simmental and brown swiss genetics to a type with a higher conformation.
He founded Colonia Cows and last year, sold 25 bulls to semen collection centres and has exported embryos to Canada, US, Italy,  Germany and New Zealand.
«Today we sell embryos and heifers and bulls all around the world at [artificial insemination] stations.»
Lupschen also wants polled cattle and recently paid €42,000 (NZ$65,381) for top genetics.
«If you want to have success in this programme, you must have the highest [quality] heifers, not the middle. Only then can you have success and play with the big players.»
Their 240 hectare farm includes a large cropping area of 60ha of maize silage, 25ha of wheat,145ha of grassland and 35ha of forest.
The farm has been in the Lupschen family for 270 years and each generation has added infrastructure and other improvements.
For the past 15 years he has used four Merlin robots to milk his cows. The set-up is similar to robotic milking farms in New Zealand. The cows have a stall area where they can rest, are free to go outside and walk up to a robot for milking.
He has three barns on the farm – one for his milking cows with a separate area for calving cows, a second one for mating and a third for pregnant cows.
Calves are kept in pens initially before being housed in groups of 10 in igloo shelters, where cameras monitor them. As a result,  his calves have a one per cent death rate.
He milks the cows year round, with four to five lactations a year averaging about 30 litres/day. He says the biggest animal health problem he faces is lameness.
The milking cows wear identification tags on their lower legs and are scanned every time they are milked to measure production and other data.
They are fed  twice a day on a mix of home-grown grass and maize silage, processed barley from beer production and soya meal.
The biogas plant helps keep his operation sustainable. It takes 60 tonnes a day of manure material from the farm as well as food waste from nearby restaurants and hospitals to convert into methane. An electric generator produces 800 kilowatts an hour of electricity, powering the farm and allowing Lupschen to sell any surplus. It also provides heated water for the district.
After processing, the organic waste is recycled back onto the farm as crop fertiliser.
Lupschen owns the €4 million (NZ$6.2 million) plant in partnership with a friend. While it was expensive, he believes it is an investment as Germany is currently considering alternative energy options.
Built in 2009, it will take 20 years to pay off at a fixed price, regardless of whether energy prices move up or down.
He estimates it has halved what he used to pay in electricity costs.
Gerald Piddock travelled to the International Federation of Agricultural Journalists Congress in Bonn, Germany with funding from the New Zealand Guild of Agricultural Journalists, Silver Fern Farms and Deer Industry New Zealand.
 
Source:  Stuff
Link: http://www.stuff.co.nz/business/farming/82193293/german-dairy-farmers-struggle-through-milk-slump
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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