Our mighty MILK!

“As a company in the food industry, we responded early to the outbreak of the coronavirus, and took the necessary precautions to keep everyone safe: We established a crisis management team which constantly monitors the situation, evaluates what needs to be done and introduces the measures that are needed. That’s how we are making sure that DMK is doing the right thing in this volatile situation.

Of course, we also have to protect people. As Germany’s largest dairy cooperative, we atre feeding the popula - tion and beyond, providing high-quality dairy products. Working hand in hand with our political and food retail partners, we are ensuring that the nation is supplied with dairy products. I would like to express my special thanks to our employees, who do their very best every day, in difficult circumstances, to ensure business goes on as usual. I also have the greatest respect for farmers through - out the country – ours and all others – who are making sure our food supplies continue. This shows how important it is to support our farmers and to protect them.
The coronavirus epidemic calls on the population to show a great deal of solidarity. As a cooperative, that sense of “we” and “us” is already part of our DNA. I am proud that we at DMK are doing our bit to make sure people come through this difficult time in good shape.”

2019 placed enormous demands on all of us, the farmers, the employees in the DMK Group and the entire industry. Our payout price in 2019 was not what we wanted it to be. On the upside, however, at DMK we managed to solve many difficulties over the past year that had been weighing on us for some time. We have finished our extensive restructuring of the DMK Group. We have put a period of high investments behind us for now. We have done our homework for 2020. We will continue to be careful with money and we are seeing that the investments made over the past years are starting to pay off. However, given the overall situation, we will have to continue to be cautious. Nowadays, amid the coronavirus pandemic, it is difficult to make any forecasts about the future.

We are and remain a company of farm - ers. And we will step up and defend our farmers – also when it comes to negotiating prices with retailers. We are in a better position to do this today than we were in the past, because we know that we are not just supplying a raw material but are creating modern food products. That’s why we will not accept prices that do not allow us to pay our farmers enough money for their milk.

Agriculture is under massive pressure – and not just from one but from several different sides. Consumers and food retailers come with ever greater demands: GMO-free, organic, low fat, high protein, ecological packaging – and yet safe and convenient, all at the same time. Younger consumers have additional wants and needs: vegan products, environmental protection and resource-conserving production. We cannot and will not ignore our consumers’ desires. On the contrary, they also offer us enormous opportunities! And that is why we are happy to do all this, as a company and as farmers. But it also costs us effort and we want to be rewarded accordingly. We at DMK play our part in this: Providing food for consumers and supplying the food retail trade – but above all as a cooperative of farmers who, as suppliers, also want to be able to make a living from their work.

Even in a time of great uncertainty we can count on the regulatory jungle in Brussels and Berlin to keep on growing. The latest regulation on fertilizer that saw many farmers protesting on the streets was just the last straw. At least the issue is now getting the attention it deserves. With our sector strategy, we are bundling forces in dairy farming. We are consistently pursuing our goal, setting standards ourselves as an industry, and not allowing politics to dictate the way we work. We want to shape the debate ourselves, speak in a confident, powerful voice, actively engage in dialogue with our consumers, politicians and the media, and ensure the discussion is based on transparent information.

We are continuing to develop and improve our Milkmaster program. At the start of the year, we reconfigured it to make it clearer. We have made our milk money accounting more transparent and we have updated the surcharges for GMO-free milk production, Milkmaster, logistics and cooling costs. We have also launched myMilk, our digital interface. Now, farmers can access forms, news and individual information with just a few clicks. We are also working on a fixedprice model meaning that some milk volumes can be hedged on the exchange through DMK. That helps create much more security in planning, if needed. 

Our goal is still clear, to move away from being purely a provider of standard goods towards being a producer of high-margin products. That‘s why we are constantly launching new products onto the market. To name a couple of examples: “Kalder Kaffee – amazingly strong” and “with oats.” We are going to create an overarching theme for our protein-rich MILRAM products that focuses on healthy eating. We are going to create more ice cream flavors under the MILRAM and Baileys brands. And we are busy abroad, too, expanding our site in Russia, and we have raised our stake in the flourishing whey derivatives business to 100 %. And another piece of good news is that we have had our Strueckhausen plant certified for China.

The plant in Strueckhausen and the powder tower in Beesten cost us a lot of money in 2019 and the years before. However, both sites will earn money in the coming year and we still have capacity at Strueckhausen so we won‘t have to invest more to work at full capacity there. We have also now consolidated the ice cream division. Above all, however, we had to cope with an enormous loss of milk volumes in 2019. We achieved this, too, by acting decisively and I can say in all honesty that we have made DMK fit for the future.

As before, most of our processing was of standard goods that are more subject to major fluctuations in price than branded goods. We had hoped that prices would go up after the drought but this was not the case. This year, we are expecting stable milk volumes in Germany, due to smaller dairy herds and tougher requirements under German law governing fertilizer. Feed is also scarcer. An expansion in the production of cheese is likely. Production of butter and skimmed milk powder is likely to be scaled back. Across the EU, milk production is expected to increase by 1%. Global milk production will continue to grow, albeit at a slower rate than in the past. Otherwise, much is unclear, for example regarding the negotiations between Britain and the EU following Brexit, or increasing protectionism in terms of global trade.

This situation is extremely dynamic and it is difficult to make reliable forecasts. At DMK, we have set up a coronavirus task force, which addresses the situation each day and is in ongoing contact with the authorities and industry associations. Our goal is to prepare as best we can for all possible eventualities. The task force is also in close contact with suppliers and service providers to maintain supply chain security.