The dairy sector is one of the most dynamic and complex sectors in the agri-food landscape, characterized by a supply chain that ranges from milk production to processing into dairy products to distribution. In this context, dairy-specific ERPs can offer integrated solutions that can automate processes, improve product traceability and optimize supply chain management, improving operational efficiency and profitability. But let’s first take a look at what’s new in the industry.
Current Context of the Dairy Sector in Italy and Europe
European situation
In 2024, cow’s milk production in the EU-27 increased by 1 percent in the January-May period, driven by the positive performance of some of Europe’s leading producers-France (+1.1 percent), Germany (+0.3 percent), Poland (+4.8 percent) and Spain (+2.3 percent). However, farmgate milk prices stabilized at around 46 euros/100 kg in the first half of the year, below the record levels reached the previous year. This situation reflects a balance between growing supply and stable demand.
Situation in Italy
Milk production in Italy is also recovering, with a 1.5 percent increase in the January-May 2024 period compared to the same period in 2023, in line with the trend of major European producers. The national farmgate price has remained stable since the beginning of the year, reaching 51.6 euros/100 liters in June. This stability is the result of competition with EU suppliers, offset by rising prices for traditional cheeses, such as Grana Padano.
Dairy Product Price Trends
Grana Padano, one of the top products on the Italian market, reached record prices for the minor maturations, reaching 9.63 euros/kg in June, up 10 percent from the already high level a year ago. This increase was supported by brisk foreign demand. Similar trends for Parmigiano Reggiano, which surpassed 11 euros/kg for 12-month maturation, growing 7.9 percent compared to June 2023. In contrast, other products such as cow’s mozzarella recorded a price decline (-5.5 percent year-on-year), while the price of butter almost doubled from the previous year, exceeding 4 euros/kg for fresh cream churn.
Foreign Trade
Foreign trade saw a significant increase in January-April 2024, with Italian cheese and dairy exports growing 13.2 percent in volume and 8.4 percent in value. European destinations contributed the most to this increase. On the import side, the first four months of 2024 saw an 11 percent increase in volume for tank milk, thanks to more competitive supply prices.
Domestic Purchases
In the first half of 2024, falling prices of major references led to a reduction in Italian households’ spending on milk and dairy products (-2.4 percent compared to the same period in 2023), with volumes purchased also decreasing (-1.6 percent). However, some categories such as yogurt (+3% in volume) and fresh cheeses (+0.7% in volume) registered an increase. Fresh milk, on the other hand, continued to lose share significantly, down 7.5 percent in volume.
How an ERP can transform the dairy industry
An ERP integrates all business processes-from raw material management to manufacturing to distribution and sales. The main functionalities of an ERP for the industry include:
- Production automation: in fact, it enables the automation of production processes, reducing downtime and increasing operational efficiency. Automated recipe management, for example, ensures that dairy products always meet quality standards.
- Traceability and quality: one of the main advantages is the ability to improve traceability throughout the supply chain. Each stage can be monitored, ensuring the quality of the final product and facilitating compliance with health regulations.
- Supply chain management: integrating these aspects enables optimization of raw material sourcing, production and distribution. ERP makes it possible to monitor inventory levels in real time, improve logistics, and reduce storage costs.
- Analysis and reporting: finally, advanced analysis and reporting tools are available to make strategic decisions based on up-to-date data.
An ERP for the dairy sector? FOOD365 from Velika
A concrete example of an ERP specifically for the dairy sector is Velika’s FOOD365, a management solution based on Microsoft Dynamics 365 Business Central.
This ERP is designed to support small and medium-sized enterprises in the integrated management of administrative, commercial, logistics and production processes. The platform is flexible and the interface intuitive, which allows staff to operate quickly and easily, without requiring long start-up periods.
FOOD365 covers all major operational areas of a dairy farm:
- Administration: chart of accounts management, accounting situations, asset and liability cycles.
- Commercial: managing price lists, orders, invoicing, returns, cash flow, sales analysis and variances.
- Logistics: warehouse movement tracking, pallet management, packaging and labeling specifications.
- Production: planning and management of production steps, inventory control, and finished product accounting.
FOOD365 offers significant benefits, such as time and cost optimization, increased production performance, and efficient inventory management, ensuring complete lot traceability of raw materials and finished products.
In addition, the solution is highly customizable to meet the specific needs of each company and agribusiness sector, and can also be integrated with MES systems for advanced production data management.
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