The Drop in Milk Prices in Germany Reduces Farmers' Margin by 14.8 Cents per kg
According to agrarheute's monitoring, in March 2026, purchase prices for milk for farmers developed unevenly. In the northern regions, where prices for regular milk are currently lower than in the south, some dairy processing companies increased payments to producers. In the south of the country, where the overall price level is higher, several dairy factories reduced purchase prices or left them unchanged.
Prices for regular milk have been showing a double-digit decline since the fall of last year. High volumes of milk supply continue to put pressure on the market, despite recent partially positive signals in milk product prices in Germany and internationally.
The economic efficiency of dairy farms in the first quarter of 2026 significantly deteriorated compared to 2025, market experts from AMI report. The monthly margin from revenue and variable costs has been under pressure since mid-2025.
After reaching a peak of 23.8 cents per kg of milk in July 2025, the margin has continuously decreased due to declining revenue, while costs remained generally stable. By March 2026, the margin had decreased by 14.8 cents per kg, averaging 9.0 cents per kg of milk. A particularly sharp decline occurred at the end of 2025 and the turn of the year.
It is important to note that this margin also needs to cover labor costs, building maintenance, and other fixed expenses, which vary significantly depending on the region and the farm structure.
According to AMI, on the income side, the most significant impact was the reduction in milk purchase prices, which in the first quarter of 2026 accounted for about 80% of revenues. Since August 2025, they have decreased by approximately 14 cents per kg of milk, significantly straining overall income. Other revenue components could only partially compensate for this.
The sale of cull and breeding livestock, on the other hand, gained more importance. If at the beginning of 2025 it accounted for about 10% of income, by early 2026 its share had grown to almost 20%. The reason was a significant increase in livestock prices amid declining milk purchase prices.
Income from culled cows in the first quarter of 2026 amounted to 5.90–6.00 euros per kg of live weight. Calves for fattening brought an average of 169–205 euros per head from January to March due to active demand and limited supply.
Nevertheless, the overall income situation remains tense. According to preliminary estimates by AMI, total revenue in the first quarter of 2026 averaged 49.1 cents per kilogram of milk compared to 61.5 cents per kilogram in the same period last year.
Based on results from January to March 2026, AMI calculated an average cost coverage (Deckungsbeitrag) of about 850 euros per dairy cow on an annual basis. This indicates a significant deterioration in prospects for 2026.
In 2025, cost coverage was at a high level of 1851 euros per cow. Even in the long term, the current level is below average: the average indicator over the past ten years is 936 euros per cow.
