B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 1 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Dairy Press Tour Switzerland Sunday 27 October 2013 The Abolition of Milk Quotas and the Challenges Involved Dr. Markus Zemp President BO Milch

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 2 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Source: SFSO / FOAG Breakdown of the Agricultural Sector in 2011

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 3 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Export-Dependence of the Swiss Dairy Industry Sources: TSM, SMP, VMI Import 430 Mio. kg Export 940 Mio. kg Domestic Milk Production: approx. 3.4 billion kg Inland need : approx. 2.9 billion kg

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 4 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / The Milk Branch Organisation Association set up in June 2009 The Milk Branch Organisation represents the entire value-added chain According to its statutes, the purpose of the Milk Branch Organisation is to strengthen the efficiency of its members in the Swiss dairy industry by maintaining and promoting added value and market share in domestic and foreign markets Membership: 4 national organisations of milk producers and commercial and industrial milk processors 24 regional organisations of milk producers 5 regional organisations of commercial milk processors 11 industrial milk processing companies 2 retailers

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 5 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Market-Regulation Measures taken by the Milk Branch Organisation Standard contract for the first and second purchase of milk Aim of the standard contract: To improve legal and contractual security at all levels according to the corresponding article in the statutes Key elements in the standard contract: Agreement on volume, price and duration of contract Segmentation of milk purchasing Obligations on the part of the purchaser and the vendor Reference to guideline prices for the individual segments Transparency between the contracting partners

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 6 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Segmentation of Milk Purchasing Aim of the segmentation To ensure payment for untreated milk that corresponds to differing basic conditions depending on the market segment; To ensure that Swiss milk, in particular surplus supply, is processed and marketed in a regulated fashion; To reduce price pressure on the stronger market segments from the point of view of added value; To ensure that market trends are clearly passed on and to promote market- orientated behaviour among all players in the added-value chain right down to the level of individual milk producers.

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 7 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Segmentation of Milk Purchasing A, B and C milk segments SegmentUse of milk A-segment Dairy products with considerable added value (protected or subsidised) B-segment Dairy products with limited added value or greater competition (not protected and not subsidised) C-segmentRegulating or clearance products, not subsidised

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 8 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Trend in Milk Production Source: TSM

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 9 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Source: TSM Number of Milk Producers According to Volume of Production / 2012 (excl. summer grazing) Mengenangaben in kg Mengenangaben in To.

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 10 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Trend in Total Milk Production in Switzerland since 2005 JahrGesamtmenge in Tonnen Differenz in % zu Vorjahr Index (2005 = 100) ' Source: TSM

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 11 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Trend in Producers Prices in Switzerland and the EU (LTO) January 2010 to July 2013 Sources: BLW / LTO

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 12 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Guideline Prices in Cents per Kg Milk 2012 Jan.Feb.MärzApr.MaiJuniJuliAug.Sept.Okt.Nov.Dez. A-segment Kein RP B-segment C-segment Jan.Feb.MärzApr.MaiJuniJuliAug.Sept.Okt.Nov.Dez. A-segment Kein RP B-segment C-segment

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 13 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Market Relief and Export Promotion by the Milk Branch Organisation Source: BO Butter

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 14 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Results The Milk Branch Organisation is the common platform for the entire added-value chain in the dairy industry There are major differences in interests and the parties involved have to learn to collaborate Milk prices fluctuate considerably depending on processing and region (distance from market). Despite expansion of milk volumes, it has been possible to maintain the difference in milk prices in comparison with the EU

B RANCHENORGANISATION M ILCH BO M ILCH - IP L AIT - IP L ATTE 15 Branchenorganisation Milch, Belpstrasse 26, 3007 Bern / Results Major structural changes The suckler cow option is attractive (protected market) Milk volumes since abolition have risen by 8.4%, have now levelled out, although some dairy farms are still increasing their milk yield