The Union of Unions of Farmers and Livestock Farmers denounces that the distribution sector is engaging in a milk price war that is influencing the industry to put pressure on farm-gate prices. The organization references information published by FACUA indicating that last April Mercadona lowered its private-label milk by 1 euro cent (to 96 cents), a move Carrefour followed just days later.
However, this price drop was felt most heavily at the producer level. According to data from the Ministry of Agriculture, the average price in April fell to €0.49 per liter across Spain. This quotation represents a drop of more than 4 euro cents, meaning that, on average, the prices received by dairy cattle farmers have fallen by 9% in a context where production costs remain high and in some cases are rising. "It is inconceivable that we are in this situation, where farmers continue to have conditions imposed on them, such as reducing their income by almost 10% from one month to the next, when no production cost has eased. Industry and distribution are suffocating the production sector; they continue to take advantage of the weakest link in the chain," they denounce.
All this while the dairy industry last week, in the context of World Milk Day (June 1), touted the importance of consuming dairy products, "essential" for health, and called for "building bridges" to achieve a "remunerative and competitive" model for the entire value chain. Faced with the current "geopolitics of uncertainty," the president of the National Federation of Dairy Industries (Fenil), Javier Roza, called on public administrations to "not make short-sighted decisions" so that the dairy chain can "invest, grow and guarantee supply in the long term."
Roza highlighted the presence of the dairy industry in rural areas, where it generates stable quality employment, and stressed that "without milk there can be no dairy industry, and without a dairy industry there can be no primary production." "We are not opposing activities. We cannot suffocate the producer nor stop being competitive. We have to build bridges and find a remunerative and competitive model for everyone in the chain," he added.
However, the reality is quite different, with farmers leaving the activity due to lack of profitability because of the prices they receive. By autonomous community, the Union of Unions highlights that the industry strikes harder in some of the largest producing regions, with Galicia recording price drops of 12%, Castile and León 10%, Castile-La Mancha 11%, Extremadura and Madrid 8%, and Andalusia 6%.
The Union of Unions also denounces that, in Galicia, several manufacturers for Mercadona are proposing for this quarter contract offers that, ignoring the reality of the farms, again propose similar drops and further strain the already difficult situation of the agricultural sector. The organization criticizes this practice that the chain can afford from its position, since it already has 30% of the market share, and urges, on the one hand, the Food Information and Control Agency (AICA) to open an investigation, and the Ministry to consider defining abuse of dominant position in the Food Chain Law.
"It is difficult to convey to the consumer that what is good for their wallet today will harm them in the long run," comments the Union of Unions. "The pressure that dairy farms suffer will eventually be transferred to the shelf," they point out, noting that in April there were only 8,600 dairy cattle farms in Spain, 530 fewer than in the same period last year, representing the disappearance of 1.5 farms per day.
The Union of Unions explains that this situation with distribution and industry is not new and that these practices occur regularly. On this occasion, it is also aggravated by increasingly high production costs that farms cannot absorb. In this regard, it is noted that the extra cost per liter for a dairy cattle farm already amounts to 6 euro cents, especially due to energy costs (which have increased by 30%) and feed. Likewise, the organization recalls that the cost of fertilizers also ends up affecting livestock production costs. Considering the drop of up to 7 euro cents in some cases, the real situation is that farmers have 13 euro cents less liquidity per liter every month since April.
Value in the shopping basket.
Dairy products are present in 100% of Spanish households and represent 10% of spending on mass consumption, 15% of volume and 37% of shopping baskets, according to the consultancy Worldpanel by Numerator (Kantar).
Its Director of Institutional Relations, Raquel Arribas, highlights that average spending on dairy products exceeds €500 per year per household, 13% more compared to 2022, and the sector is second in value after meat in the shopping basket. Dairy products are present in one out of every two consumption occasions and were able to drive the growth of mass consumption above expectations in the last year, adapting to changes in habits, points out Raquel Arribas.
