German dairy cooperative DMK believes that it is "ready" for the end of European Union milk quotas, having developed a three-pronged strategy to broaden its portfolio and market presence while investing in modernisation.
The milk cooperative said in a release this week (18 March) that sales during 2014 totaled EUR5.3bn (US$5.7bn) – flat compared to revenue reported for 2013, a year when sales rose 20%. Milk volumes were up 4%, DMK revealed.
The company, which did not disclose profit levels for 2013, said that profit totaled EUR42m in the year. "The company made a deliberate choice to forgo higher profits in order to absorb payment losses for farmers in the fourth quarter and pay its shareholders a milk price that is as stable as possible," DMK said.
DMK said that it is prepared for the end of the European milk quota system, which comes into effect on 1 April. The company has invested "more than" EUR500m over the last three years to ramp up production and processing technology; to grow its presence in strategic categories including baby food, ice cream and health products; and expand in new markets such as Eastern Europe, Asia, Africa and South America.
"The good results we were able to achieve in 2014 despite the highly volatile market attest to the success of our three-pronged strategy," said Dr Josef Schwaiger, spokesman for the management board. "By investing in a targeted range of value-adding products, highly-modern, innovative production facilities and international markets, we can absorb temporary fluctuations or even market distortions – like those currently being experienced – in the future too, and continue to offer the members of our cooperative a competitive milk price."