The Importance and Necessity of a Robust ERP System in the Dairy Industry
In May, Friesland Campina lowered its milk price by €2.50 due to lagging demand and increasing milk supply. Smaller cooperatives are also facing a surplus of milk, leading to significant financial strain for dairy farms. According to Niek Groot Wassink, a financial advisor for dairy at DLV, larger farms feel this pressure most due to high financing burdens. The expected surge in demand from China and Russia has not materialized, leaving half of dairy farmers dealing with financial difficulties.
New Opportunities for Farmers
The crisis in the dairy industry is pushing farmers to seek new solutions. An increasing number of farmers are shifting to organic milk production. In the first quarter of 2016, 60 dairy farmers applied for conversion to organic with Skal, the supervisory body for organic products—more than the 49 who applied in all of 2015. Another promising option is goat milk production, which is experiencing rapid market growth for baby formula. Goat milk is more digestible for babies and for people in Asian countries. Additionally, the rising number of people with lactose intolerance has boosted demand for goat milk.
Diversification in the Dairy Industry
Cooperatives are also playing a crucial role in transforming the dairy sector. By offering a more diverse product range, they can strengthen their market position. Peter Koopmans, COO at Milcobel Dairy, notes that producing authentic Belgian cheeses was a strategic choice for Milcobel. Currently, Milcobel is seeing strong growth in these Belgian cheeses, with “Brugge” as one of its premium brands. Producing high-quality milk powders is also becoming increasingly common. A recent article in AD reported that Chinese buyers are now even using children to purchase as much baby formula as possible, circumventing store limits that restrict customers to one pack per person due to the ever-growing demand. According to Bert van Steeg, secretary of Retail Netherlands, “The demand for milk powder keeps increasing, and it’s so profitable that people are getting creative in finding packs.” A wise focus indeed.
Future-Proof Solutions with ERP
Diversification can help the dairy industry offset the impact of falling milk prices. A versatile ERP system is essential for effectively managing complex processes such as product diversification, diverse production sites, and international partnerships. With its global focus and flexibility, a professional ERP system like Oracle JD Edwards provides companies with the overview and insights needed for sustainable growth. Thanks to its expertise in the food industry, Cadran is a valuable partner for implementing, upgrading, and supporting ERP solutions, especially within the dairy sector.
