The milk margin monitoring tool is based on the Farm Accountancy Data Network (FADN) and compensates for the time-lag in data availability by using price-trend information from DG Agriculture and Rural Development and Eurostat. Depending on the availability of information, the tool provides estimates after the end of the reporting quarter (see methodology in Annex).
This brief presents the estimates of EU milk production costs and margins up to the last quarter of 2016. After falling in 2009, milk production costs increased progressively afterwards. The growing costs trend was reversed in 2014 year – after an overall increase by almost 35% between 2009 and 2014 and reaching the peak, the operating costs started slowly decreasing throughout next 2 years. Developments in milk production costs per tonne are mainly driven by changes in the cost of purchased feed and energy as well as farmers’ feeding decisions to fluctuations of milk price. The seasonality of milk production also plays a role in quarterly trends: milk yield is higher after calving in the second quarter of the year, which results in lower production costs per tonne.
Between 2008 and 2009, the average EU milk margin dropped by 30 % due to the milk price fall. It recovered afterwards in spite of rising operating costs, thanks to the increase in milk prices, but 2015 and 2016 were characterised by a drop in milk prices with a consequent and sharp deterioration of milk margins. In 2016 the EU average milk margin was at very low level, by 10% lower than in 2009 crisis year, despite the lowest in the last five years costs of production, but still much higher than in 20082011. The recent years show variations from one to another, and even from quarter to quarter.