Regulation 2019/1746 sets out new reporting requirements for milk and milk products which will apply
from 1 January 2021. Weekly price reporting is already in place for whey powder, SMP, WMP, butter
and commodity cheeses. The prices are expressed in terms of 100 kg of product, ex-works, in contracts
concluded for delivery within 3 months:
– From Member States representing 2% or more of total EU production
– For commodity cheese, where the particular cheese type represents 4% or more of
the Member State’s total cheese production
The new regulation extends these reporting requirements to the selling prices of cream, drinking milk,
mozzarella (would already be covered by the rules today but has not been included) and fat filled
powder.
In order to provide a clear and accurate view of the market conditions, the Commission has proposed
some definitions for cream, drinking milk, mozzarella and fat filled powder. Eucolait suggests a number
of changes to the proposed definitions, which are outlined below.
Cream
Commission proposed definition: centrifuged cream, pasteurised, with 20-40% fat in bulk (packed in
min 15kg bags)
Eucolait comments: we consider the 20-40% fat range to be too broad to give an accurate picture. We
would suggest 40% fat as the definition to apply, as this is the most commonly traded category of bulk
cream. In addition, the minimum bag size for cream could be set at 20kg. Otherwise, sales to food
service will be included which is a different market.
Drinking milk
Commission proposed definition: Baseline: UHT treated semi-skimmed milk (fat content ranging from
1,50% to 1,80%). In 1l brick or bottle.
Eucolait comments: there are a wide range of products that fall into the category of drinking milk, not
least because in most northern Member States (pasteurised) fresh milk is the standard drinking milk.
We think that the Commission baseline is appropriate but that a conversion factor should be created
to allow for reporting on fresh milk prices. Similarly, if prices of drinking milk with a higher or lower fat
content than the range stated above are to be used, they would have to be subject to conversation
factor. We would advise against including any specialty milks subject to price premiums such as GMOfree, lactose free, pasture-based or enriched milk. For calculating whether the “2% of EU production”
benchmark is reached, will all drinking milk be taken into account or only the milk corresponding to
the definition?
Mozzarella
Commission proposed definition: Low moisture (min 40% dry matter) cheese made by ‘pasta filata’
processing of milk, chilled/frozen, in block (1-5 kg minimum)
Eucolait comments: we propose that the baseline weight should be 15kg blocks. Another very common format is 42,3 kg loaves of mozzarella within one foil (9,2kg), or 42,5kg (10kg). Possibly both formats could be included in the definition. The minimum dry matter should be slightly higher at 45% or even 50% as that is the standard for bigger blocks for industrial processing.
Fat filled powder
Commission proposed definition: Blend of skimmed milk and vegetable fats (max 30% fat content, min
20% protein content), in powder form (25kg bags)
Eucolait comments: standard FFP has a 24% protein content, therefore we consider that the definition
for price reporting purposes should be aligned with this (or at least minimum 23%). Even though the
share of non-standard FFP is increasing, it would not be opportune to include products with different
protein contents within the same quotation. The price difference between 24% and 20% protein is
substantial.
Buying prices for cheese and butter
Despite considerable opposition from stakeholders, regulation 2019/1746 also introduces mandatory
reporting of buying prices for butter and for the five main cheeses by retail and ‘other food business
operators’. We understand that ‘other food business operators’ include food industry buyers as well
as traders. It is worth noting that buyers already provide input to many of the selling prices notified by
Member States to the Commission. Due to the complexity of the dairy supply chain(s), we do not
consider the separate publication of buying prices and their comparison with selling prices as helpful
for the purpose of greater market transparency. On the contrary, such price references may be
wrongfully used by certain operators to drive a hard bargain. We would like to reiterate that because
of the multiple outlets (retail, food service, ingredient use, exports) for all the different dairy products
derived from milk, price comparisons at different stages are not meaningful. We are concerned that
the publication of these buying prices will lead to simplified margin calculations. If such buying prices
are nevertheless published, due consideration needs to be given to business confidentiality.
Download the full PDF here.