Effects of the length of the milk collection route on the choice of the locality of milk processing

Abstract

The goal of the research was to identify how important was the distance between the milk producer and the milk processor in their decision of which dairy plant would do the processing. The study should indicate if the advantage of a lower price offered by the distant milk producer would be eliminated or preserved by the transport costs. In the study, the cost of various lengths of milk collection routes in Central Europe has been examined. The difference in cost, whether a short or long journey was travelled, was compared to the range of raw milk prices within the chosen territories in Central Europe. The results proved that the milk collection costs in Europe enable rather long journeys, from the producer to the processor, to be made. In three of the four examined regions, the usual collection route of 200 km followed by an additional journey of 400 km enabled the preservation of the milk price advantage gained due to this journey. The feasibility of long collection journeys would reduce the impact of the success of local processors on the economics of the surrounding milk producers and vice-versa and could play an important role in the movement of raw milk in Europe in the ongoing concentration and liberalization process of milk production in the EU.