Report of the Executive Board
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Quality To safeguard the safety and quality of its products throughout the entire production chain, from farm to consumer, FrieslandCampina has its own integral quality system, called Foqus. With Foqus FrieslandCampina offers consumers, customers and the authorities the guarantee that the products and production processes meet the stringent standards in the field of food safety, quality, safety, working conditions, fire protection and environment. An extensive programme of training courses and audits will help safeguard the implementation and continuous monitoring of Foqus in the production facilities, on the member dairy farms and at the suppliers of raw materials.
FrieslandCampina, together with the Cooperative, commands the entire production chain from farm to end product. The guiding principles of the quality control are the statutory stipulations, with the addition of supplementary demands. The various international standards, such as HACCP, ISO 9001 and ISO 22000, OSHAS 18000 and ISO 14000 are integrated into Foqus so that both FrieslandCampina’s customers and consumers can be assured that the products are safe and of the highest quality.
Market developments in 2013 During the first half of 2013 milk production in the major milk exporting countries was far lower than usual. Drought in New Zealand reduced the country’s production by nearly 14 percent and in the European Union the supply was down by 2 percent due to the long winter and the mediocre quality of the available roughage. Bad weather conditions also reduced milk production in Australia and Argentina by 8 percent and 7 percent respectively. Only in the US was milk production higher than in the first half of 2012 – by 0.5 percent. The decline in production caused prices on the dairy market to rise. Prices for full-cream milk powder rose from 3,625 US dollar/ton in February 2013 to 5,100 US dollar/ ton in May 2013. During the same period the quoted prices for skimmed milk powder rose from 3,650 to 4,800 US dollar/ton. Butter oil rose from 3,700 to 4,800 US dollar/ ton partly due to the extra demand for this product from China. In the EU there was a shortage of fat because of the high demand for cheese, especially from Russia, and the reduced supply of local milk. This caused the Dutch listed price for butter to jump from 3,340 euro/ton at the beginning of January to 4,200 euro/ton in July. As a result of the lower milk production and higher listed prices of dairy commodities, the prices of many consumer products also rose steadily. In Europe dairy consumption was under pressure due to the economic recession.
In the Southern and Eastern European member states milk production remained lower than in the second half of 2012. In New Zealand production rose by over 5 percent. Growth in the US stuck at around 0.9 percent in the second half of the year due to milk price increases lagging behind the high prices for feed. Milk production in countries such as Argentina, Australia the Ukraine and Belarus remained lower than in the whole of 2012 due to the weather and low margins for dairy farmers. In China local milk processing was down due to revised quality demands on processed milk, unfavourable weather conditions and cattle disease. Milk production in Russia, the world’s second largest importer after China, was also lower than in the previous years.
From mid 2013 on milk production began to rise worldwide due to more favourable weather conditions and the higher margins on milk production for dairy farmers. In the second half of the season milk production in the EU rose by 3.5 percent and primarily in the more northerly EU member states (the Netherlands, Germany and Denmark).
Total global milk production in 2013 was lower than in 2012. As a result sales prices remained high during the second half of 2013. The demand on the world market remained exceptionally high due to the combination of high demand from China and Russia and low stocks. During the second half of 2013 China imported 25 percent more dairy products (mainly milk powders and infant nutrition) than during the comparable period in 2012. This meant total imports of around 4.5 billion kilos of milk equivalents. In the same period Russia imported around 173,000 tons of cheese and 52,000 tons of butter – 10 percent more than in 2012. The continuing high demand for dairy products on the world market meant that, contrary to market expectations, dairy prices rose sharply 2013. The price of cheese rose more sharply in the second half of the year because in the first half of the year it had risen less than the price of other dairy products. The price for Dutch naturally ripened Gouda cheese rose from 3.50 euro per kilo to 3.95 euro per kilo.