Dairy Dimension Exclusive – By Prashant Tripathi, Jordbrukare India
The European Union’s latest dairy market outlook for 2025 highlights a sector showing internal stability but facing increasing pressure on global export markets. Milk deliveries are projected to rise modestly by 0.15%, supported by higher yields (+1.2%) and improved milk fat (+0.2%) and protein (+0.1%) content, even as dairy herds continue to shrink (-1%).
Milk Prices Remain Strong but Erode Competitiveness
EU raw milk prices remain elevated, averaging EUR 53.3/100 kg in May 2025, 28% above the five-year average. These prices help preserve farmgate margins, especially as feed and energy costs remain volatile, but they make EU dairy products less competitive in the global market.
Export Growth Slowing Dramatically
The past two years underscore growing difficulties for EU exporters:
- 2024 exports declined by 1% overall (milk equivalent), led by significant drops in butter, skimmed milk powder (SMP) and whole milk powder (WMP) shipments.
- 2025 exports are forecast to remain flat (-0.2%) despite domestic supply stability.
- SMP exports: -2%
- WMP exports: -5%
- Butter exports: -2%
- Cheese exports: +0.1% (barely growing)
- Whey exports: +2%
The slowdown is attributed to weak import demand from major markets such as China and Algeria, as well as stiff competition from New Zealand and the United States, where production costs remain lower.
Cheese and Whey Lead Production Gains
Processors continue to focus on higher-value dairy solids. Cheese and whey production are both expected to rise by 0.7%, buoyed by strong internal demand and niche export opportunities. However, global cheese exports are expected to plateau, and whey growth remains moderate.
Butter production is forecast to remain stable (+0.3%), while exports decline (-2%). SMP and WMP face more pronounced challenges, with export declines of 2% and 5% respectively.
Regional Differences
While Germany, France, the Netherlands, and Belgium expect milk deliveries to contract due to herd reductions and disease pressures, Poland and Ireland are poised for growth thanks to higher yields and favourable grassland conditions.
Global Market Impact
The EU’s weakening export performance could have notable global repercussions:
- Tightened supplies of SMP and WMP could support international prices in the second half of 2025.
- New Zealand and the US are likely to capture market share, especially in Asia and the Middle East.
- Reduced EU butter exports could influence already volatile butter prices globally, particularly in emerging markets like India.
Expert Insight:
“The EU dairy market is stable at home but is slowly losing ground globally due to high price levels. If price disparities persist, international buyers will increasingly shift toward Oceania and North America,” explained Prashant Tripathi – Jordbrukare India.
Outlook Beyond 2025
The EU dairy sector is expected to maintain steady milk deliveries as rising yields offset herd reductions. Cheese and whey will continue to be the strongest product segments, supported by domestic consumption and high-value niches.
However, without a softening in production costs and farmgate prices, commodity exports (butter, SMP, WMP) could face prolonged challenges.
To remain competitive, EU exporters must focus on value-added products—specialty cheeses, fortified dairy products, and advanced whey fractions—where price competition is less intense.
