– Forecasts predicted that the price of milk this year would not record major drops. It was predicted that it would stay around PLN 2/l. Unfortunately, the predictions did not come true, and the price of the raw material has been falling since January this year – informs Dorota Grabarczyk, a milk market analyst at the Polish Federation of Cattle Breeders and Dairy Producers.
As Grabarczyk emphasises, the recorded drop in raw material prices contributes to the deterioration of the price to cost ratio; it should be noted that production costs remain high and may increase even more from the middle of the year, mainly due to the announced increases in energy, gas and water prices.
Poland is a large milk producer and must export a significant part of its production. According to data from the Ministry of Finance, in the period January – May 2024 the value of dairy product exports from Poland was 2 percent lower than in the same period last year, which certainly affected the prices that producers receive.
The analyst mentions reduced demand from China, which is one of the largest importers of dairy products, as another reason for the worse situation.
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Will the Agricultural Protection Fund reduce purchase prices?
The next problem that the industry is paying attention to is the Agricultural Protection Fund. According to the new regulations, purchasing entities will be obliged to calculate quarterly payments of 0.07% of purchased agricultural products, up to now it was 0.125%. As a result, the functioning of the Fund will negatively affect purchase prices, because payments to the Fund will be included by purchasing entities in the calculation of raw material prices, and as a result, the prices received by milk producers will be lower.
– Of course, we can say that this is a safeguard for the future, but in practice the Fund operates in such a way that all industries pay into one fund, and only some receive compensation. It is worth noting that with the scale of production that we have, payments from milk and poultry producers constitute 50% of all payments to the Fund, and there is little probability that these producers will benefit from compensation – emphasizes Dorota Grabarczyk.
