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Chiefadvisor Ole Kristensen, Knowledge Center for Agriclture, Denmark

AGRICULTURE IS GLOBALIZING, WHAT DOES THAT MEAN FOR OUR

DAIRY FARMERS.

Local community

National community

European community

World community

To be economic sustainable dairy farms have to be in line with their surrounding environment

The role of agriculture within the local community (neighbouring issues, job creation, community)

National conditions regarding• Economy• Politics• Environment • Animal welfare• Social conditions

• A growing population and a growing middleclass

• Increasing demand for food good market prospects

• Management of resources/resource efficiency

• Decreasing income support in exchange for providing public goods• Intervention system only to be used in crisis situations• No milk quota regulation after 2015• Production on market terms implying much greater volatility in prices

1950

1960

1970

1980

1990

2000

2010

2020

2030

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

More developed regionsLeast developed countriesLess developed regions, excluding least developed countries

Bil

lio

ns

A growing population

A growing middle class

Positive market prospects

Volatile prices

Resource management and efficiency

Animal welfare

Future production conditions- production on market terms

Competitive milkproduction

Denmark

Competitive compared to:Other milkproducers

Other types of farmproducts

Other use of farmland

Finland New Zealand

Price of milk

Price of production factors

5...|

Factors that influence competitiveness(special for Finland)

Geografic and climatic conditions. (water, short growing season, distances)

Holding structure. (FI relative small holdings, < 40 cows, strong consolidation (-40% 2003-2010))

Ownership, workforce and level of skills. (family farms, less than 13% other workers, well educated farmers)

Production facility Level of investment. (374 to 558 euro cow/year from 2000 to 2009, transition from tied up to loose housing)

Economy in milkproduction (high cost, to labour consuming - efficiency)

Strenght of the value chain

6...|

Precipitation Tons milk pr. km2

45%

2%

6%

8%

18%

26%

7...|

Net investments in dairy farming1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

-750

-500

-250

-

250

500

750

1,000

1,250

1,500

2005-2009 2000-2004

Net

in

vest

men

t p

er c

ow

, E

uro

s

Source: FADNFI

The costs of producing milk (average 2007-2009)

Slovak

ia

Sloven

ia

Luxe

mbo

urg

Malt

a

Sweden

Ger

man

y

Hunga

ry

Franc

e

Nethe

rland

s

Eston

ia

Poland

Spain

Portu

gal

0

20

40

60

80

100

120

Cash costs DepreciationInterest on own capital Own labour costsMilk output per kg milk Milk output + other output per kg milkMilk output + other output + subsidies

Eu

ros

per

100

kg

mil

k

Feed and other input

supply

Production

Processing

RetailConsumi

ng

Profit recirculated in the value chain

Profit

• Product innovation and development• Keep and maintain the cooperatives competitvenes• Through productionstrategies Cooperative can mitigate the price variation

2 July 201010...|

The value chain is dominated by strong Cooperatives

International networks

The European Dairy Farmers is a network of leading dairy farmers to exchange experience and knowledge. www.dairyfarmer.net

International Farm Comparison Network www.ifcndairy.org

European Cattle Innovation Partnershiphttp://www.scar-cwg-ahw.org/index.php/livestock-sectors/cattle/

2 July 201011...|

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Leadership and management tools

- managerial coaching(advisory board,

legal board, mentor)

- management roles, allocation and staffing

- tools ex SOP, LEAN,

- management implementation.

Key Performance Index (KPI)

13...|

The KPI ToolTranslated - generic

14...|

Rene Rasmussen Marts 13th 2014Reproduction results

Nu

mb

er of in

semin

ation

Average

Target

Fer

tili

ty r

ate

Achived

Ready for pregnancy test

Advisory BOARD support you the way you choose

Established by the farmer

Group of advisors e.g• Economy• Production• Political• Car dealer• Public person

Fixed agenda

National discussion groups - Focus

1. Leadership

2. Strategy

3. Economy

• SWOT, budget etc• Strategy plan• Economy reports

Tools

• Meeting on the farm• Dialog and discussion• Input to the host

Choose what you need

”Coffeeclub”

Club One to one

Mentor

National discussion group

Advisory board

Stable School

Local network groups

“Many of the really good leaders are not head of anyone.

People follow them nonetheless - consciously or unconsciously.”

Board

Education and social media

2 July 201018...|

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Video

Pictures

Files

Word

Network

Branding

Promote

Engagement

DiscussionCrowdsource

Co-produce

Cooperate

Disseminate

0

5

10

Facebook TWITTER

19...|

• Conditions inherent in nature• Low density long distances extra costs• Farm structure (FI) extra costs• Strongly dependent on economic support

• Strong value chain• Research, advisory service• Less strong competition

from other types of farming• Level of investment• Relatively high solvency• Age structure <35/>55 (FI=

0,25 EU average=0,11)

Will Finish milkproduction be competitive in the future?

Geografic conditions Huge distances, short growing season, not the best land allocation

high cost to produce Structure of the holdings

Average herd size number 19 in EU 70% of the cows in herdsize less than 100 cows

Owner and workforce Good age distribution between (<35 years/>55 years) About 87% is family labour Farmers with a good education. More education needed? Investment

Cost of production ? Valuechain A good advisory system (AKIS)