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's activity report 2022

The cooperative EPIKO is a cooperative whose legal members are regional cooperatives and companies. The members of the cooperative are dairy producers: farmers, peasants. The main objectives are to ensure the best possible milk purchase price for members, stability in payment for milk, and to minimize market risks and market failures.

As of 31.12.2022, the cooperative has 5 members, including 2 recognized producer groups (cooperatives) and 3 dairy farming enterprises (producer groups).

The operating year 2022 was significantly better for dairy producers in terms of raw milk purchase prices compared to previous years. According to Statistics Estonia, the average purchase price of raw milk in 2022 was 463 €/t, which is on average 147 €/t higher compared to 2021 (the average purchase price of raw milk in 2021 was 316 €/t). The reason for the price increase was mainly the increase in input (energy) prices, which reduced the income from the sale of raw milk, but despite this, it positively affected the economic activity of producers. However, milk purchase prices are still lower compared to the EU27 average. In 2022, the average purchase price of raw milk in the EU27 was 502 €/t (source: MMO – Milk Market Observatory), which was 39 €/t higher than the corresponding figure for Estonia in 2022.

TÜ EPIKO has been able to ensure a competitive raw milk purchase price for its members during the reporting year.

The total volume of raw milk purchased in 2022 was 85.3 thousand tons, averaging 234 t per day (in 2021, respectively 92 thousand tons and an average of 252 t/day).

The volume of raw milk purchased from members in 2022 was 84.9 thousand tons, which is the largest procurement volume among dairy cooperatives that do not own a dairy processing company. In 2022, TÜ EPIKO's procurement volume was about 11% of the total raw milk procurement volume in Estonia.

In addition to traditional raw milk sales, in 2022, 377 tons of 40% cream and 298 tons of skimmed milk powder were processed from 3.75 thousand tons of raw milk purchased from its own members, which were marketed by TÜ EPIKO. The income from marketing allowed to increase the purchase price of raw milk for members.

TÜ EPIKO has developed a considerable ability over the years to hedge risks arising from economic activity with accumulated financial resources. In the context of the growth perspective of equity and milk purchase-sales, the economic situation of the cooperative is good.

We consider the activities of TÜ EPIKO to be sustainable.

In 2023, the cooperative will continue to procure raw milk from its members and market it to industries according to market conditions. Although the dry matter content of raw milk sold by TÜ EPIKO members has improved, it is still on the agenda to motivate its growth (by specifying and differentiating the purchase price conditions). As milk accounting has become complex and therefore also labor-intensive and is still evolving towards complexity, it is planned to order a suitable IT solution for milk accounting.

Financial ratio comparison analysis 2022: liquidity ratio (current assets without production assets/short-term liabilities) 1.11 (2021: 1.13) net asset profitability ROA (net profit/assets) 0.6% (2021: -1.9%) return on equity ROE (net profit/equity) 6.6% (2021: -16.1%).

Üllas Hunt

Board Member