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The Argentine dairy industry faced difficulties in 2024, with a 6.5% decline in milk production, totaling 10.585 billion liters (L). However, optimism remains for 2025, with a projected 5.7% increase, equating to an additional 1.19 billion L. Growth estimates vary by region, with central/northern areas showing higher growth rates. The production decline in 2024 was attributed to factors such as drought, farm closures, and high temperatures, although pricing improvements and rainfall contributed to a recovery in late 2024. However, challenges like increased feed costs, a reduced number of cows, and economic uncertainties could hinder future growth.
The closure of 606 dairy farms in Argentina between Mar-23 and Dec-23 highlights an accelerating trend of production concentration. Since 1988, the number of operational farms has dropped from 30,131 to 9,129 by the end of 2024, with smaller farms being disproportionately affected. Key factors include consecutive droughts, rising feed costs driven by policies like "dólar soja", a preferential exchange rate for exports in Argentina to boost USD reserves, and low profitability due to controlled milk prices. Representing 6.4% of total farms but contributing 34.5% of production, large farms benefit from greater financial resilience and access to technology. In contrast, small farms, often family-run, struggle with limited credit access, pushing many out of business. Experts stress the need for government-backed credit lines to support small and medium producers and address the growing disparity in Argentina's dairy sector.
Milk imports in Colombia typically begin in early January, primarily from the United States (US) under the Free Trade Agreement (FTA). However, as of January 7, 2025, only 457 tons of powdered milk were imported, just 2.4% of the 18,987-ton tariff-free quota. Once this quota is filled, a 2.2% tariff will apply. In comparison, the European Union's (EU) milk powder quota stands at 8,800 tons, with an extra tariff of 18.4% beyond that.
The slow pace of US imports is partly due to a 4.86% surcharge imposed by Colombia's Ministry of Commerce on US milk, which will expire on January 16, 2025. Despite steady national milk production, imports are being maintained to allow dairy processors leverage in price negotiations with local farmers. Starting in 2026, US milk powder will enter Colombia duty-free, and EU milk will follow in 2028, although the Colombian government has yet to renegotiate the FTA with the US.
In Nov-24, milk processors and co-ops in Ireland reported a record domestic intake of 510 million L, marking a 34% year-on-year (YoY) increase and the highest November intake since 1975. Despite this, total milk intake from Jan-24 to Nov-24 fell by 1.1% compared to 2023, according to the Central Statistics Office (CSO). Fat and protein content showed slight variations, with protein rising to 3.98%. Skim milk powder production declined by 1,200 tons YoY, while butter output rose by 1,500 tons.
In 2025, Ireland's milk prices are expected to improve slightly due to a 4% increase in production and favorable weather conditions, although production costs will remain high but lower than in 2024. Feed costs will drop by 9%, and fertilizer and labor costs may see slight reductions. Farm margins will rise, with net income per hectare (ha) and per L expected to increase by 35% and 29%, respectively. Despite global dairy market uncertainties, milk prices in Ireland are likely to rise by around 5%, supported by stable energy prices and a positive short-term outlook.
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Milk prices in Germany peaked in W51 2024 at USD 3.87 per kilogram (kg) due to adverse weather, reduced production, and processing delays. Since then, prices have dropped significantly, reaching USD 2.67/kg in W2 2025, representing drops of 25% week-on-week (WoW), 31.01% month-on-month (MoM), and 35.82% YoY. Despite a 3.3% YoY reduction in the dairy cow population and seasonal declines in milk yields, the price drop is due to the comparison with the peak values. Prices will likely continue fluctuating until supply and demand reach stability in the coming months.
Milk prices in Belgium decreased slightly to USD 3.89 in W2, reflecting WoW and MoM declines of 1.52%. YoY prices fell significantly from USD 4.99, marking a drop of 22.04%. Higher prices earlier in 2024 resulted from supply constraints, including reduced dairy cow populations, lower milk yields due to adverse weather, and stricter environmental regulations. The recent price reductions are attributed to weakened demand dynamics and improved supply chain efficiency, mitigating some seasonal challenges.
Milk prices in the Netherlands declined slightly to USD 2.18 in W2, reflecting a WoW and MoM decrease of 0.91%. YoY prices fell sharply from USD 2.76 , a drop of 21.01%. The significant YoY decline is primarily due to persistently high milk supply levels throughout the year. Prices are expected to stabilize as government interventions to reduce milk production take effect, ensuring a more balanced and stable supply in the coming months.
Milk prices in France experienced a minimal WoW drop to USD 3.05 in W2, while MoM prices fell more notably from USD 3.22 in W51 2024 to USD 3.05, a decline of 5.28%. YoY prices also decreased slightly, from USD 3.12, down 2.24%. This trend reflects a market correction after elevated prices earlier in 2024, driven by reduced supply caused by disease outbreaks like Bluetongue Virus Serotype 3 (BTV-3) and Epizootic Hemorrhagic Disease (EHD), which impacted fertility and herd sizes. Additionally, rainy weather in spring and summer reduced production efficiency, initially driving prices higher. As these challenges ease, prices are stabilizing, leading to the current declines.
Milk prices in Poland dropped significantly across WoW, MoM, and YoY comparisons following peak pricing in W51 2024. Prices fell to USD 2.36 in W2, an 11.61% WoW decline. MoM prices saw a sharper drop from USD 3.38 in W51 2024, down 30.18%, while YoY prices fell 15.71% from USD 2.80 in W2 2024. This decline reflects market stabilization as Poland's milk production increases, driven by favorable conditions such as modernization and restructuring efforts. These improvements have bolstered output, easing supply constraints and stabilizing prices.
To counter the volatility of milk prices, producers should explore value-added products like cheese, butter, and milk powder, which showed resilience in countries like Ireland. Governments and cooperatives can provide technical training and marketing support for value-added production. For example, Irish butter production increased even as milk intake declined, showcasing the potential for diversification.
Data-driven solutions can help producers anticipate and respond to market shifts, such as price fluctuations seen in Poland and the Netherlands. Governments and industry stakeholders should invest in real-time market monitoring tools and predictive analytics, such as those offered by Tridge, to manage production and pricing more effectively.
Challenges such as drought in Argentina and adverse weather in Germany and France show the vulnerability of dairy production to climate change. Invest in climate-resilient practices such as efficient irrigation systems, heat-tolerant livestock breeds, and diversified feed sources. Sharing expertise globally could reduce the impact of climate challenges.
Sources: Tridge, Agri Land, Contexto Ganadero, Diario Convos, Diario Lechero, El Regional Digital, Todo Lecheria
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