Why milk from the region has become more expensive

Food price hike

Why milk from the region has become more expensive

DBA / Sven Hoepe

Video: Evening Show, 05/03/2022, Konrad Spermberg and Helena Diller | picture: DBA / Sven Hoepe

The increase in food prices is also affecting products from the region. At Hemme Milch in Uckermark, several factors drive costs up. There is little leeway for the product.Written by Konrad Spermberg and Helena Diller

rbb tv 8:15 pm: “We have to talk! Everything is getting more expensive – is there a new downward spiral of poverty?”

Standing in the barn with his milking cows, Ludwig Gunnar Hemme reaches for forage and explains that the first price increase in the production chain starts before the animals eat the feed. “The little black dots are what’s known as rapeseed meal. Then we also have grain feed and minerals. These additives are causing us these huge cost increases right now.”

Hem says the cost of feed additives has doubled since last summer. Last summer he paid a maximum of 250 euros for a ton of feed additives – now more than 500 euros. Hem says he spends an extra €25,000 a month on the extra rapeseed meal alone. And this despite the fact that Hemme produces 90 percent of the feed itself: grass, alfalfa, alfalfa and corn.

The causes of inflation are not always clear

All machines on the farm use a lot of electricity, which also increases production costs. Milking machines and packing plant as well as chiller. “Everyone knows from home: the refrigerator uses electricity. We have a XXL refrigerator and it needs XXL electricity. You can’t change that.” So far, Hemme does not have an overview of the exact amount of the additional electricity costs. But in light of high consumption and high electricity prices, the increase is likely to be significant.

Gunnar Hemme General Manager at Hemme Milch in Angermünde (Source: rbb)
Gunnar Hemme is the managing director of Hemme Milch in Angermünde. | picture: rbb

In addition to feed and energy costs, higher raw material prices are causing Gunnar Hemme’s production costs to rise. Hemi says that the cost of yogurt pot lids is more than 30 percent due to the high price of aluminum. The cartons in which dairy products are packaged are also becoming more expensive. Here, however, Hemi is at a loss as to the reasons: “You can’t understand much, I’m not an economist. I can only see what we’re getting here. I can’t understand the reasons.”

Second price increase in a year

Because of all these factors, which make production more expensive, the milk producer is now reacting to an increase in prices – the second in a year. From this summer, customers will have to pay 1.39 euros for a liter of milk in the supermarket.

Many food producers are currently in a similar situation to that of Hemme MilchAnd “It’s a combination of price increases that today’s active managers in the food industry have not experienced,” stresses Bernd Biehl of the newspaper “Lebensmittel-Zeitung”.

And the price increase isn’t just confined to the region: “At the same time, the price of milk on the world market is going up because supply is getting scarcer and animal feed, including a lot of wheat, is getting more expensive.” A rise in the price of milk in another country can also affect the global price of milk, which in turn is reflected in our business.

Hemme gets 80 cents a liter

In the refrigerated section of supermarkets, Hemme milk from Uckermark can currently be found in the middle price segment at 1.29 euros. After deducting value-added tax, which costs just under 25 cents, a 30 percent margin is charged for retail. 73 cents left for Hemme.

According to this calculation, seven of the 10 cents increase will remain with Hemme – and in total he will then get 80 cents per liter of milk, from which he will have to finance everything.

Hemme demands low VAT

The troubling question for Hemme now is whether they are too expensive for consumers – and will they turn to cheaper products. A trend towards this can already be seen, says Bernd Biehl: “Market researchers have also found that more cheap brands and private labels are being bought.” Retail chain brands currently cost about 80 cents a liter in supermarkets.

So Hem hopes the politicians will lower the final price of food: “Do something good for the people, and lower the value-added tax.” This would roughly offset the current price increase, which consumers will have to pay from the summer.

Will this secure her work in the future? “I can only say now: what is here, today, and now,” Hemme says. “What is to come tomorrow and the day after tomorrow – and there is still so much to come – I can never foresee.” After all, its regional product distances are short – and therefore transportation costs are at least low – compared to many competitors. Hemme now hopes his position will give him an advantage in the future.

Broadcast: Evening Show rbb24, May 3, 2022, 7:30 pm

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