EU Milk Production Sees Modest Growth Amid Industry Challenges
The US Department of Agriculture’s Foreign Agricultural Service (USDA FAS) forecasts that EU all milk deliveries will reach 152.8 million metric tons (MMT) in 2026, marking a 0.1% increase over 2025. This growth is driven by increased cows’ milk production, which compensates for a 0.5% decline in 'other' milk production, mainly from sheep and goats.
Despite reduced commercial feed costs, smaller farms are under pressure from declining farm-gate milk prices, disease outbreaks, and stringent environmental regulations. These factors are expected to lead to a 0.7% decrease in cow numbers in 2026. Nevertheless, productivity gains are anticipated to offset this decline, resulting in cows’ milk deliveries of 148.6 MMT, a 0.1% rise from 2025.
Farm-gate milk prices in the EU began to fall sharply in the third quarter of 2025, reaching 6% below the five-year average by March 2026. This trend is due to increased European production and a lack of competitiveness on the global market. Fluid milk domestic consumption is projected to drop by 0.7% to 23.1 MMT in 2026, while factory use consumption is expected to grow slightly by 0.2%.
The EU dairy industry continues to prioritize cheese production, supported by strong domestic demand and stable export markets. Cheese production in the EU27 is forecast to grow by 0.8% in 2026, reaching 11 MMT, driven by robust consumption in the hospitality and tourism sectors.
Conversely, EU27 butter production is expected to decline by 1.4% to 2.15 MMT in 2026, influenced by higher cheese revenues and existing butter stocks. Butter exports are also forecast to fall by 4.1% due to increased transport costs and steady domestic consumption.
In 2026, EU27 skim milk powder (SMP) production is predicted to decrease by 3.3% to 1.48 MMT. This reduction is linked to increased cheese production, which limits milk availability for other products, along with weaker domestic and export demand.
