In March 2025, the two main milk-producing countries in Europe, Germany and France, which account for one-third of the total production, experienced a lower-than-expected milk output.
France had a significant decline in milk production. According to market participants, total milk deliveries for March 2025 were approximately down 5.7% year-on-year (y-o-y). Meanwhile, Germany’s milk output dropped 3.8% y-o-y in March 2025.
Despite the decrease in milk production, average farmgate prices in France saw a modest decrease. This decline in prices may be attributed to various factors, including adjustments in processing strategies by major dairy companies. For instance, Lactalis, the largest French dairy firm, announced plans to reduce its milk intake in France by 450 million litres annually until 2030.
This decision aims to limit exposure to volatile international prices of bulk commodities and focus more on other consumer dairy products like cheese and yoghurt, which could influence farmgate prices. However, German farmgate milk prices increased month-on-month in April 2025. This upward trend in prices reflects ongoing supply constraints and rising production costs in the German dairy sector.
This downturn aligns with broader European trends. EU milk production decreased approximately by 1.8% in Q1 2025 y-o-y, according to market participants. Several factors contributed to this reduction in Europe’s milk production: a reduction in the number of dairy cows in 2024 led to lower milk yields, the spread of diseases such as bluetongue adversely affected milk productivity, and structural challenges such as labor shortages, bureaucracy and environmental regulations.
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Image source: Adobe
Written by Jose Saiz
