EU milk production may decline by 2% amid feed shortages and rising costs

Raw milk production in the European Union could decline by 2% in the fourth quarter of 2026 compared with the same period last year. According to Rabobank’s forecast, the main factors will be reduced feed availability following summer droughts and heatwaves, as well as rising production costs. Meanwhile, EU farmgate milk prices have begun to recover gradually, although the increase remains insufficient to offset higher feed costs.

According to preliminary European Commission data, the average EU farmgate milk price reached 43.11 euro cents/kg in September 2026, up 0.84% from August. However, prices remained 19.24% below their September 2025 level. Month-on-month increases were recorded in 12 EU member states, including Belgium (+11.7%), Lithuania (+5.12%), Austria (+3.96%) and the Netherlands (+3.53%).

Rising feed costs are becoming a major challenge for European dairy farms. According to IFCN estimates, feed prices increased by 9.2% over the past month to $283/t, while futures quotations for the European market have reached approximately $350/t. The shortage of high-quality feed is linked to unfavorable summer weather conditions, which damaged pastures and reduced forage crop yields. High energy and fertilizer prices are adding further pressure to production costs.

Experts expect rising feeding costs to become one of the main factors reducing dairy farm profitability over the next 3–6 months. Due to shortages of high-quality feed, farms may need to adjust rations, increase the use of concentrates or optimize herd sizes by retaining their most productive cows. This could slow the recovery in milk yields and support farmgate milk prices amid constrained supplies.

Declining milk production and rising production costs in the EU could create additional opportunities for Ukrainian dairy exporters, particularly in butter and skimmed milk powder. In September, the average price of extra-grade raw milk in Ukraine was 33.93 euro cents/kg, noticeably below the EU average. However, realizing this potential will depend on market access conditions in the EU, the competitiveness of Ukrainian processors and the stability of export logistics.

Tags: EU, compound feed, milk products