Dairy cooperative FrieslandCampina is offering farmers a bonus of €2 per 100 kilos of milk if they either maintain or cut their production.

This is the equivalent of a 5% income bonus, the company said in a statement. The cooperative has some 20,000 members

The move follows the scrapping of EU milk quotas, which led many farmers to increase their production capacity. However, the company is unable to cope with the volume and wants farmers to keep levels low.

‘Producing less is in the collective interest,’ spokesman Rob van Dongen told the Volkskrant.

Demand

FrieslandCampina has invested heavily in new factories to meet demand, particularly for infant formula from China. However, milk production has risen more than expected and demand in western Europe is below forecasts, the Volkskrant says. The Russian boycott has also had an impact.

Milk prices have fallen 30% over the past year and many dairy farmers are now in financial difficulty, the Financieele Dagblad says.

Harm Wiegersma, chairman of the Dutch dairy producers’ union, who also delivers to FrieslandCampina, said farmers are being forced to produce more milk to make ends meet.

The decision to end milk quotas in April will go down as an ‘historic mistake,’ he told the FD. ‘The problems are all to do with the ending of quotas. We warned there would be too much milk but FrieslandCampina said it would be easy to process.’