Mr Schlichtmann, before Fixed Price existed – what was it like dealing with fluctuating milk prices?
You simply accepted it. Just as today, the price was announced every month – and you hoped for the best. Twenty years ago, that was easier because prices were more stable and predictable. But that has fundamentally changed. Today, the milk market is global. What happens in China, what US farmers harvest, what’s going on in New Zealand – it all ends up affecting my milk statement in the end. Now I understand that prices are shaped by many factors – and that I can at least influence part of it myself.
How was Fixed Price developed – and what role did your family play in it?
My father Hermann was part of the pilot group with his farm. DMK didn’t develop the model behind closed doors; it was tested in real-life operations with 26 farms. That was important. There were hardly any examples in the industry to follow. Even Mirko Wätjen, the project manager at DMK, said at the time: we were essentially starting from scratch. So my father helped build something that simply didn’t exist before. I think that’s remarkable.
”I focus on it intensively twice a month. On the stock exchange, I’d have to watch prices constantly. That would be far too stressful.”
What has actually changed in your day-to-day work since using Fixed Price?
There are two fixed trading dates each month. I prepare for them, look at the Kiel exchange milk value, sometimes talk things through with my father during lunch or call our business adviser – and then I submit my offer online before 10 p.m. After that, the topic is done. It doesn’t take much time. I can focus on the farm again.
A herd of 530 cows is no small operation. How much of your milk do you hedge?
That varies. The model allows up to 30 per cent of the monthly volume. But I don’t always secure the maximum amount – it depends on the price level. I’m not trying to catch the best possible price. The goal is to cover running costs and make repayments predictable. If the offered price achieves that, I secure part of the volume. If not, I wait.
That almost sounds like a shift in mindset – from farmer to businessman?
Farmers today are real entrepreneurs, so understanding markets is extremely important and helpful. I read trade publications differently now. I understand why butter prices on the EEX rise or fall. And I think that’s one of the underestimated effects of Fixed Price: it has encouraged farmers to engage with market mechanisms in the first place. That changes how you think about your business.
But market volatility remains – Fixed Price doesn’t eliminate the problem.
That’s true. If prices collapse, I still make losses on the non-hedged volume. And if prices rise, I don’t benefit from increases on the hedged share. That’s the price of planning security. But I’m fully aware of that. This isn’t about winning. It’s about protection. Anyone who misunderstands that will end up disappointed.
”Banks see it positively when you can demonstrate security that covers your running costs and repayments.”
Has the model changed since it was introduced in 2020?
Yes. Since December 2025, additional instruments have been used for hedging, allowing more attractive pricing. Previously, the offer was sometimes less competitive. Today, the economically most sensible fixed price is always offered.
Around 750 farmers have participated so far. What’s important to understand?
The model depends on continuity and having an individual strategy. You need to know your farm well: your production costs, your financing requirements. If someone participates once and then quits because, in hindsight, the market price turned out better than the fixed price, they haven’t understood the principle. This change in mindset takes time.
What advice would you give to a fellow farmer who is still hesitant?
Start small and take the time to understand the system. Talk to your adviser. And don’t make the mistake of thinking it’s about beating the market. It’s about taking a certain degree of control over your own income. That’s a very different feeling. A much better one.
How does Fixed Price work?
Since September 2020, DMK farmers have been able to set a fixed price for part of their milk themselves. Fixed Price may sound like something from the world of stock exchanges, but its effects are felt directly on farms. Twice a month, DMK calculates fixed prices for up to twelve months in advance based on dairy product prices on the futures market, following a defined process. Farmers then decide via an online platform whether – and for how much of their milk volume – they want to secure those prices. The maximum is 30 per cent of their average monthly milk delivery. The agreed fixed price replaces the standard DMK base price for the secured volume – with no additional costs or deductions for the farmer. Individual bonuses, such as logistics or Milkmaster bonuses, remain unaffected.
