According to the latest production cost and producer price calculations in the organic sector, producers in Germany received an average 60.36 cents/kg of organic milk in the accounting year 2022/23, as follows from the press release of the European Milk Board. However, the production costs, including a fair remuneration for farmers, amounted to 68.95 cents/kg. This means that producers were left with a cost shortfall of a good 12%.
In the accounting year in question, organic milk producers received an average 71.63 cents/kg ; 60.36 cents/kg through the milk price and 11.27 cents/kg in the form of subsidies. Given that farming inputs and general operating costs amount to 55.92 cents/kg post deduction of income from cattle sales, the real income for farmers was a mere 15.71 cents/kg of organic milk. That is just 65% of the income that would be appropriate based on applicable collective agreements. This appropriate income amount was calculated based on an average hourly wage of about 25 euros (including employer contributions). In light of these facts, the slogan socially and economically sustainable does not hold true in the case of organic milk production.
The data on milk production costs in the German organic milk sector is compiled by the Bureau for Rural Sociology and Agriculture (BAL) and is updated annually.
Milk Marker Index for organic milk
The Milk Marker Index for organic milk (Bio-MMI) illustrates the evolution of costs for organic milk production. For the accounting year 2022/23, the MMI for organic milk is 103, which means that the production costs for German organic producers are 3 points higher than in the base year 2015 (2015 = 100). In comparison, the MMI for organic milk in the accounting year 2016/17 was 94, which means that costs increased by 9 index points in this period.
Price-cost ratio (shortfall)
The price-cost ratio showcases to what extent the prices paid to producers cover milk production costs on organic dairy farms. For the accounting year 2022/23, producers were able to cover only 88% of their production costs through the milk price; this means that the cost shortfall was 12%.
