Malta’s competition and consumer rights watchdog will be investigating Malta Dairy Products after it hiked the price of milk.

But local dairy farmers are arguing that the price of milk in Malta is actually artificially low, and that they often struggle to make ends meet.  

The price of one-litre packs of whole milk, semi-skimmed and skimmed milk rose from €1 to €1.15. Lactose-free milk now costs €1.40, up from €1.25.   

The price increase of milk was the second hike announced in 2023. Until June, the price of a one-litre carton of Benna skimmed milk was 92c.    

A spokesperson for the Agriculture Ministry said the latest price hike is “not justified” considering the substantial assistance the government has provided.  

“Given the monopolistic nature of the market, the relevant authorities (the Malta Competition and Consumer Affairs Authority) will be investigating the recently announced price increases,” the spokesperson said.  

In the last years, several measures were introduced to assist the sector and offset higher feed prices because of the war in Ukraine.   

“The government had also committed to provide further significant financial assistance in the coming years for further reforms to make the milk production sector more efficient, earmarked new land for MDP to build a new milk production facility and engaged in talks to assist the company as necessary. This assistance was always conditional on the price of milk – a staple food – remaining stable,” the spokesperson said.    

The government – which has a 30% stake in MDP – will now be reviewing its position regarding further and previously committed assistance. 

While the price of animal feed has remained stable thanks to government subsidies, the price of forage has increased significantly

 

But local dairy farmers say the operational costs keep mounting, making it impossible to keep prices low.  

Frank Fenech said Malta Dairy Products pays farmers using a formula that dates back to 1986.  That equation only considers the price of animal feed, which Fenech said makes up less than half of a cow’s diet. 

“The price of milk for us only increases with the cost of living or if the cost of animal feed goes up,” the 68-year-old said.

“But the problem is that grains [animal feed] are only 40% of a cow’s diet. 60% is forage,” said Fenech, an ex-president of the Milk Producers’ Cooperative. 

While the price of animal feed has remained stable thanks to government subsidies, the price of forage has increased significantly. 

Fenech said farmer sell milk at around 70c per litre. Depending on the farm’s efficiency, that is either below or at the cost of production.

Fenech said the MDP’s price increase for consumers was justified, adding that the price of milk is still much lower than other countries. 

Citing a Times of Malta article, Fenech said that the price of a litre of full-fat milk in Sicily costs €2.28 and in Cyprus €1.48.

“The price of milk is so low in Malta because we are absorbing much of the costs ourselves,” Fenech said. 

Even MDP loses money or barely breaks even, he said. 

While consumers will be paying more, the price at which MDP buys milk from dairy farmers will not change, Fenech said. 

“We will take nothing from this 15c price increase,” he said. 

“To sustain ourselves, we need to discuss the issue with MDP to change the price we are paid,” the dairy farmer said. 

“In the past, we have been able to absorb costs, but now there has been such an exorbitant increase in the price of forage, it cannot be sustained,” he said. 

Fenech said the price of forage has increased by 75 per cent in two years and is now more expensive than animal feed. 

“Forage costs €470 per tonne, and animal feed costs around €390 per tonne,” he said. 

While the dairy farmers’ cooperation has a 70 per cent stake in Malta Dairy Products, the company acts independently, Fenech said. 

Asked whether MDP should change the formula that determines the price the company pays for milk, a spokesperson for MDP acknowledged there is an issue. 

“MDP acknowledges the complexities involved in determining milk prices and understands the concerns raised by the dairy herdsmen.”

The spokesperson said the “historical” formula regulates the current payment structure and any adjustments would require thoughtful consideration and collaboration among stakeholders. 

“MDP is open to constructive discussions on potential adjustments to the payment model. However, any changes should be approached with careful consideration, taking into account the interests of all stakeholders involved.”