Dairy Market: Does Switzerland Need Hochdorf and Cremo? Market Analysis from 17-5-24
Spot milk price, milk fat, and skimmed milk powder all rising sharply; cheese and feed costs increasing, protein concentrates decreasing.
This week was significantly livelier, and prices showed an upward trend. However, the cheese market is still lagging this development, with spot milk prices remaining low at €0.37.
At the Global Dairy Trade auction on 10 May, there were also price increases; particularly butter prices surged, while skimmed milk powder experienced stagnation. Given the prevalent trend towards protein-rich foods, this development is surprising.
And in Switzerland?
The highest milk deliveries were recorded in mid-April due to the warm April weather, rather than at the beginning of May, as is usual. A sideways movement in milk inflow at a high level is currently expected.
The General Meeting of the heavily indebted Hochdorf Group took place on 15 May 2024. At this meeting, all proposals from the new major shareholder, Newlat, were rejected. Newlat had suggested cutting the remuneration of the Board of Directors from CHF 600,000 to CHF 300,000. Newlat also proposed that the Board of Directors should be composed exclusively of individuals who are closely affiliated with Newlat.
How Newlat will react to this decision remains unclear. Nevertheless, the existing Board of Directors now faces the challenge of devising a better solution for the future of the company.
According to a press release from La Liberté dated 16 May 2024, Cremo reported a loss of over 20 million Swiss Francs for the year 2023, despite a slight increase in turnover to 525 million Swiss Francs. The loss for the year 2022 was also 21 million Swiss Francs; however, that year included an extraordinary income of 11.8 million Swiss Francs from the sale of the Steffisburg site. A significant improvement in results is not expected until the years 2025/2026.
On the question: Is There a Need for Hochdorf and Cremo?
The question of viable concepts for the companies Hochdorf and Cremo preoccupies many. We have a clear stance on this matter: If cheese producers could operate under the same conditions as manufacturers of skimmed milk powder – meaning with comparable milk prices and equivalent subsidies – then the capacities of major players such as Emmi and Nestlé for skimmed milk powder production would be entirely sufficient. Moreover, we believe that a strategic focus on cheese production could quickly increase the added value for the entire dairy industry by at least 5 percent.
Nonetheless, it seems unlikely that responsible parties will be found to embrace such an advanced strategy. Therefore, the answer to the initial question is: Yes, an efficient skimmed milk powder production in Switzerland is necessary, if only to cement existing structures.
Our forecast for Q2 and Q3:
Demand for Cagliata in the south continues to fall short of expectations. However, prices remain stable. This price stability can be seen as a positive sign, especially considering the seasonal fluctuations that are common in the dairy industry, and we anticipate a price increase in the third quarter.
We will be present at the following trade fairs:
• Cibus Parma, from 7 to 10 May 2024
• PLMA Amsterdam, on 28 and 29 May 2024
• Summer Fancy Food New York, from 23 to 24 June 2024, in partnership with World's Best Cheese
• International Cheese Award, on 27 June 2024
• Sial Paris, from 19 to 23 October 2024, where we'll have our own booth
• Marca Bologna, from 15 to 16 January 2025
• Winter Fancy Food Show Las Vegas, from 19 to 21 January 2025, along with World's Best Cheese
• Sirha Lyon, from 23 to 27 January 2025
• Tutto Food, Milano, 5 – 8 Mai 2025
• Le Mondial du Fromage et des Produits Laitiers in Tours (France), from 14 to 16 September 2025
Best Wishes, Affineur Walo
