Milk production has been at an all-time high in Germany, but weak demand has put pressure on prices, as reflected in a recent purchasing contract between dairy farms and the food retail industry.
But farmers were taken by surprise by the announcement by Aldi Süd, one of Germany's biggest food retailers, that prices on a wide range of dairy products would be reduced by up to 10 percent. The price of a litre of milk was slashed by 6 cent, and that of a block of butter by 14 percent.
The announcement triggered disapproval from the head of the AgrarMinisterKonferenz, which represents industry as well as state and federal agriculture ministries. Alexander Bonde said that, “the irresponsible price battles of discount supermarkets” was ruining the Germany's farms and rural areas.
In 2011, German dairy cows churned out 29.3 million tonnes of milk – the most ever produced. This is a development that has “put the dairy industry under pressure,” said Hans Foldenauer, spokesperson for the German Federal Dairy Farmers Association.
He added that although the volume of milk produced had risen, the number of dairy producers was falling and that farmers are having to battle constantly against climbing energy and animal food prices.
Another huge discount supermarket chain Rewe said it would also be reducing prices on milk and butter from Thursday but did not confirm by how much. Another popular German supermarket chain, Edeka, confirmed that they would not be making changes to their dairy prices.