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UPDATE 1-Dutch FrieslandCampina to cut 15 pct of German workforce
December 10, 2012 / 12:52 PM / 5 years ago

UPDATE 1-Dutch FrieslandCampina to cut 15 pct of German workforce

(Adds details, background)

AMSTERDAM, Dec 10 (Reuters) - Dutch dairy producer FrieslandCampina is to cut 15 percent of its workforce in Germany to improve its competitiveness at a time when dairy farmers and producers face a squeeze on profits.

The company said on Monday that it would cut 230 out of 1,500 staff in Germany, eliminating jobs in Cologne, Gütersloh and Heilbronn, but it does not plan to close any dairies or processing plants.

About 1,000 dairy farmers in Germany supply fresh milk to FrieslandCampina, which has a total of 19,000 employees in 26 countries. The majority of its suppliers - roughly 14,400 farmers - are in the Netherlands and provide milk for the Dutch cooperative.

FrieslandCampina faces tough competition in the German market from supermarket chains and has been unable to pass on higher milk prices to consumers, a spokesman said.

Germany is FrieslandCampina’s second-largest European market after the Netherlands. Germany generates 14 percent of the company’s revenue, with the Netherlands contributing 25 percent.

An exodus of dairy farmers in the European Union, the world’s top producer, is gathering pace, with incomes squeezed by rising feed costs and major market reforms expected to lead to a larger but leaner industry.

Farmers’ incomes have fallen sharply this year as the cost of feeding cows has soared while the region’s economic crisis has kept a lid on retail prices for their products.

Retailers have begun to increase the price they pay to milk processors, which in turn have been able to pay farmers more. The rise has been modest, however, with retailers reluctant to increase prices for consumers because of the financial crisis. (Reporting by Ivana Sekularac; Editing by David Cowell and David Goodman)

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