The European milk sector will undergo far-reaching liberalisation in the next few years. According to proposals currently being considered by the European Commission, the milk quota will cease to exist by 2015 at the latest. In light of current proposals we can safely assume that the price of milk will be determined according to the global market. Based on this we can expect, as has become apparent in the past two years, that the volatility of the price of milk will increase. Additionally there is a developing trend in which cooperatives operate outside their traditional activities and are looking for expansionas a way of providing their members (dairy farmers) with an economic part to play throughout Europe. The recent merger of Campina and Friesland Foods is a clear example of this. As a result we are seeing a global milk sector emerge in which international supply and demand is determining the price of European milk. Our research shows that there is an increasing awareness among dairy farmers of market prices, and that there is a growing number of dairy farmers who are willing to supply the milk market independently. The European milk sector, with an estimated capacity estimated at 138 billion kilos of milk, around 40 billion euros, appears to be in need of a way of hedging the risk of price increases. Our conclusion of the above facts shows that there is a need for a ‘neutral’ sector in which market forces will play a part.

The European Milk Exchange offers sector members the possibility of protecting themselves against possible future price increases through its ‘cash settled futures’ contracts. This first ever European milk futures exchange homes in on anticipated world sector developments and offers dairy farmers who are active in the European and international dairy industry a platform to better manage the price risks.

European Milk Exchange BV

Beets (N-H)

www.eumix.eu