The announced merger between FrieslandCampina and Milcobel will lead to synergy effects that should ultimately be reflected in the price of milk. The merger will also lead to a redistribution of milk among farms. That is the expectation of Tom Booijink, senior specialist for the dairy sector at Rabobank.

“The merger is necessary to further strengthen each other,” Booijink said in a podcast posted online by Rabobank. “Together, the dairies process 10 billion kilograms of milk. The merger is not intended to maintain production capacity. If you take a bird’s eye view of the two dairies, you will see that FrieslandCampina processes 9 billion kilograms of milk in 25 factories. Milcobel processes 1 billion kilograms of milk at 6 locations.”

Converted, FrieslandCampina processes 0.36 billion kilograms of milk per location, while Milcobel processes 0.16 billion kilograms of milk per location. Even without Booijink saying so explicitly, it is clear that the underlying message is that a redistribution of milk to these locations is to be expected.

Booijink estimates the synergy effects at around 4 to 5%. “This should be (partly) reflected in the milk price.”