European dairy farmers are facing renewed price pressure as increased milk collection and expanding dairy production coincide with farmgate prices falling nearly 20% year-on-year, according to European Commission market data reported by Agriland.
The average EU farmgate milk price stood at 42.8 cents per kilogram in August 2026, down 19.7% compared with August 2025 and 8.3% below the five-year average. However, prices showed a modest monthly recovery, rising 2.3% in August, with September estimates indicating a further increase to 43.11 cents per kilogram.
Milk Collection Expands Across Europe
EU milk collection increased by 3% between January and August 2026 compared with the same period last year, reflecting stronger supplies across several major producing countries.
August deliveries were 0.6% higher year-on-year, with milk collection increasing in 19 EU member states.
Greece recorded the strongest growth at 13.3%, followed by Slovakia at 9.6% and Denmark at 4%. In contrast, Romania reported a 13.6% decline, Estonia fell 11.7%, and Ireland recorded an 8.4% reduction.
The expansion in milk availability has contributed to increased processing output across several dairy categories, adding pressure to farmgate prices amid a larger supply base.
Dairy Processing Output Increases
European dairy processors increased production of several major commodities during January–August 2026.
Skimmed milk powder production rose 9%, while butter output increased 7.7% and cheese production grew 3.6%. Fermented milk products recorded a 5.1% increase, while drinking milk output advanced 1.1%.
However, whole milk powder production declined 4.4% and condensed milk output fell 3.7%.
The production trends indicate continued availability of milk for processing, particularly for skimmed milk powder, butter and cheese, although individual product markets are experiencing different price movements.
Dairy Exports Rise, but Export Earnings Decline
EU dairy exports measured in milk-equivalent volume increased 11.9% between January and July 2026 compared with the corresponding period in 2025.
However, export value declined 1.5%, despite exceeding €9.47 billion, indicating that higher shipment volumes have not translated into stronger aggregate export earnings.
Product-level export performance varied:
- Butteroil: Exports increased 40%.
- Butter: Shipments rose 38%.
- Skimmed milk powder: Exports increased 14%.
- Cheese: Shipments grew 6%.
- Whey powder: Exports declined 4%.
China, the United States, the United Kingdom and several markets across the Middle East and Asia contributed to demand for selected European dairy products.
Dairy Commodity Prices Show Diverging Trends
While farmgate milk prices remain below year-earlier levels, dairy commodity markets are showing mixed developments.
Skimmed milk powder prices increased 54.6% year-on-year, while whey powder prices rose 52.3%. Butter prices, however, declined 3.8%.
These differences highlight the importance of product mix and processing decisions for dairy companies. Stronger powder markets may support processors, but the benefits are not necessarily reflected immediately in milk procurement prices paid to farmers.
Farmers Face Pressure on Margins
European dairy producers continue to face costs associated with labour, environmental compliance and animal health. Although feed and energy prices have stabilised following earlier increases, lower milk prices are putting pressure on farm profitability.
The price decline is particularly significant for farmers whose production costs remain elevated or whose operations have limited flexibility to adjust output.
A prolonged period of weaker farmgate prices could affect investment decisions, herd expansion, farm modernisation and sustainability initiatives across the European dairy sector.
European Dairy Market at a Critical Point
The latest figures highlight a central challenge for Europe's dairy industry: expanding milk supplies and export volumes do not automatically translate into stronger returns for producers.
The relationship between milk collection, processing capacity, commodity prices and export earnings will remain critical in determining how quickly farmgate prices recover.
For dairy farmers, processors and policymakers, the coming months will be important in assessing whether improving commodity markets can offset supply pressure and restore profitability across the dairy value chain.
Source: Read full story here 02 Nov, 2026 Edited and Reported by
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