2023-07-17 19:26:21
The first attack is aimed at the Migros subsidiary
The milk processor Elsa wants to pay the farmers less for the milk. Now the Fair Markets Switzerland association is threatening legal action. But there are doubts as to whether the case is suitable for going before the competition authorities.
Fewer cows, less milk: Production has fallen since 2014.
Photo: Barbara Truninger
Two weeks ago he presented himself to the public. Well will the Swiss Fair Markets Association (FMS) active for the first time. The milk processor Elsa, a Migros subsidiary, wants to pay the farmers less for the milk supplied. From July, Elsa will be forced to introduce market deductions from this month, according to Migros. The price reduction amounts to 1.5 to 2 centimes per kilogram.
The reason: the sharply increased differences in milk prices between Switzerland and the rest of Europe. That is why the “coverage gaps” are very large, for example for skimmed milk powder – and this despite contributions from the fund for raw material prices, which are used to support exports of milk-containing products.
The association FMS considers the price reduction to be “unfair”. This emerges from a letter to the Elsa management. The letter that is available to this editorial team should on Tuesday to be published. In it, the association calls on the Migros subsidiary to drop its plans. He sees no economic indications that would allow a reduction.
Such a step could be abusive within the meaning of the antitrust law, the letter says. The association reserves the right to take legal action. It is conceivable that he will bring the case before the Federal Competition Commission.
Businesses lose thousands of francs
Migros has an important position in the domestic milk market. Together with Coop, the retailer covers around 70 percent, according to FMS, and Migros’ share is 40 percent. According to the association, the Migros subsidiary Elsa should therefore be classified as a market leader. He argues that, for lack of alternatives, the milk suppliers are generally economically dependent and dependent on a fair business relationship with Elsa. “A possible price reduction increases the economic pressure on farmers in our country,” says FMS President Stefan Flückiger.
He calculates that a valley farm that produces 150,000 to 300,000 kilograms of milk will lose up to 6,000 francs a year if the price falls by 1.5 to 2 centimes per kilogram. To put this in perspective: the average agricultural income per farm in 2021 was CHF 80,700 – however, the fluctuations are considerable depending on the location and orientation of the farm.
The Swiss Farmers’ Association and Swissmilk, the association of Swiss milk producers, also see “no valid arguments” for a price reduction. Milk production has been falling since 2014, and the number of dairy cows is constantly decreasing. In addition, the weather and forage quality would keep production low in the coming months. The long-term agricultural policy framework would also not lead to an expansion of milk production. The farmers’ association and Swissmilk call on the milk processors to “stay in solidarity” and to pay the farmers the same as before.
Farmers get more for their milk than they have in a long time
In farming circles, it is feared that Elsa’s price reduction will cause unrest in the milk market and that producer prices could slide across the board. Elsa assures that she is currently paying one of the highest milk prices in Switzerland. And their milk price will remain “above average” in the future. The Migros subsidiary does not name numbers.
What is known, however, is how much Swiss farmers receive on average. It is currently 68 centimes per kilogram of dairy milk, according to federal figures. At the beginning of the year it was 75 centimes. Despite the decline, it has been a long time since farmers have been getting as much money for their milk as they have recently. Last year it was 71.5 centimes per kilogram the highest level recorded since 2008.
The reasons are varied. The main thing is that production costs have risen, for example because of higher energy pricesand milk production is declining.
So is milk production more worthwhile for farmers than ever? “That can’t be said in general,” says Stefan Kohler, Managing Director of the milk industry organization: “Many farmers have currently covered their costs with the current milk prices, they earn more.” But there are also those for whom this is not the case, for example if they have just made a large investment on the farm.
Expert gives Migros subsidiary good testimonials
At the beginning of each quarter, the milk industry organization sets a target price for the milk, which the suppliers and customers have agreed on. This forms a decision-making basis for price negotiations between the individual market partners. The aim is to stabilize the milk market. Kohler considers Elsa’s planned price reduction to be “ugly”. From his point of view, there are no reasons for the planned “market withdrawal” because Elsa is mainly active on the domestic market.
Migros or Elsa is not a member of the milk industry organization, unlike Coop, for example. However, according to Kohler, Migros and Elsa – like everyone else – largely stuck to the rules of the game. In addition, the 1.5 to 2 centimes are within the scope of normal fluctuations. Kohler doubts that the Swiss Fair Markets Association has any chance of successfully attacking this milk price reduction under antitrust law. He advised FMS President Flückiger against taking up this case.
Flückiger replies that the matter will be judged on the basis of the cases that the farmers reported to the association’s emergency hotline. “There we find that production no longer wants to put up with price cuts.”
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