Milk Market: Are self-help measures intransparent consumption taxes? Market Analysis dated 29 November 2024
Skimmed milk powder is showing a slight upward trend, the spot milk price and protein concentrates (casein) remain stable, while milk fat and cheese are on a slight decline.
Review and Current Situation
After a continuous rise in milk fat prices throughout November, we are now witnessing a trend reversal. While protein prices are rising slightly, they cannot compensate for the declines in milk fat prices.
The market for cheese and milk fat is currently quiet. Price fluctuations are occurring even with small quantities in both demand and offers.
Situation in Switzerland
There is still more than enough milk in Switzerland, and a downward movement in the international markets, along with the exchange rate, is not helping to correct this.
To prevent a potential price collapse, the industry is striving for a “private” industrial policy. These measures are being implemented at the expense of consumers, as inflated prices are enforced as a form of consumption tax, facilitated by the goodwill of the Swiss retail sector. This approach is short-sighted, as consumers are bound to react.
In open markets (particularly for cheese), imports will increase; in protected markets, shopping tourism and refinement activities will rise. As a countermeasure, Parliament will tighten borders, leading to shifts in production, a permanently reduced consumption, and higher taxes.
The situation regarding inventories of raw milk cheeses remains strained, a situation that is unlikely to change before autumn 2025.
Milk Market: Are self-help measures intransparent consumption taxes?
The answer is a clear “Yes.”
In democracies, the authority to levy taxes lies with the state. In Swiss agriculture, this right has been delegated to private organisations under the term “self-help measures”. These organisations can impose taxes on their members, which are then transferred to consumers through various mechanisms and are, like VAT, a form of consumption tax. Unlike VAT, these taxes are intransparent, and both their amounts and usage evade democratic control.
This practice of “intransparent consumption taxes” has been in place for about 20 years. The effects are gradually becoming evident. For instance, the processing industry in Switzerland, including chocolate manufacturers, is no longer competitive, leading to production relocations or closures. Consequently, consumption is declining, and higher taxes are becoming necessary.
Fortunately, this practice has its adversaries: dairy cooperatives that excessively claim the solidarity and goodwill of the retail and industrial sectors. By processing milk surpluses themselves and competing against regular dairy processors and retailers using the taxes collected, they exacerbate the situation.
Forecast for Q4 2024 and Q1 2025
- Q4 2024: Stable prices for cheese; slight increases for proteins; a downward trend for milk fat.
- Q1 2025: Milk fat prices will weaken, while protein prices are expected to hold firm. Once stocks of skimmed milk powder are replenished, the lack of demand will put pressure on protein prices.
The announced trade policy from the USA, with potential tariffs, may destabilise the market, leading to sudden price increases and decreases.
We will be present at the following trade fairs:
- Marca, Bologna, 15–16 January 2025
- Winter Fancy Food, Las Vegas, 19–21 January 2025, with our partner World's Best Cheese
- Sirha, Lyon, 23–27 January 2025
- Tutto Food, Milan, 5–8 May 2025
- PLMA, Amsterdam, 20 & 21 May 2025
- International Cheese Awards 2025
- Summer Fancy Food, New York, 29 June – 1 July 2024, with our partner World's Best Cheese
- Le Mondial du Fromage et Produits Laitiers, Tours (France), 14–16 septembre 2025
- Anuga, Köln 4.10 – 8.10.2025
Stay informed and enjoy the exquisite Swiss raw milk cheeses!
Best Wishes, Affineur Walo
