Increased shift to value-added dairy products: EU agricultural outlook 2025–2035

The report highlights increased productivity and sustainability in the EU dairy sector. It is expected that dairy markets will become more segmented worldwide, increasing the shift to value-added products. 

Resilient EU demand for dairy products leads to a forecasted increase of 6 kg of milk equivalent per capita between now and 2035 (in addition to the current 211 kg per capita).

The demand for fortified and functional dairy products could increase to meet the needs of an ageing population and health-conscious consumers.

Milk

Despite the decline in size of the EU dairy cow herd in the last decade, the increase in productivity has counteracted this, which has led to an increase in milk production (+0.8% per year).

EU milk yields are projected to continue increasing due to genetic improvements and feeding technology advances leading to further milk production increases in the next decade, but at a steadier rate of 0.1% per year.

There are, however, substantial differences in trends across individual nations, with milk production and yields in eastern countries catching up with traditionally larger nations.

The livestock sector is expected to contribute more to achieving environmental objectives and policies such as those already seen in Ireland, the Netherlands and Denmark, may lead to a further contraction of the EU dairy herd (an estimated loss of 2 million heads between 2025 and 2035).

Availability of milk solids for processing is forecast to continue to increase. In the coming decade, milk fat availability could increase by +2.6% while the availability of protein solids could increase by +1.8%.

Butter

The increased availability of milk solids is expected to result in an increase in butter production (+0.3% per year by 2035).

However, EU butter exports are predicted to decrease 0.6% per year over the next decade, despite recent strong performance.

Butter prices are currently falling, but resilient demand in the EU could provide support by 2035.

Cheese

Further growth projections for EU cheese production (+0.4% per year) are supported by global consumption trends, alongside a possible increase in domestic cheese consumption (+0.5% per year).

The EU is expected to remain dominant in the global cheese export market, supported by increasing production and demand. Cheese is expected to remain the main export product for the EU (+0.7% per year increase until 2035).

Although there's likely to be increased competition for processed and lower-value cheeses.

Whey

Whey production is forecast to increase 0.8% per year by 2035 as processors capitalise from better milk solids and generate value add.

Demand across the globe for whey products is expected to continue to increase due to new functional product lines for nutrition and health in export markets as well as for the EU’s own ageing population. This may provide support to prices.

Whey exports are expected to increase by 0.5% per year between now and 2035.

Powders

Exports and production of WMP are projected to decline due to shrinking global markets and poor competitiveness, -0.8% and -2.8% per year, respectively.

SMP production and exports in the EU are to remain stable despite poor pricing and increasing global competition. The EU and the USA are competing on key markets, which is expected to continue during the next decade.

In recent years, global trade in milk powders has shifted due to a decline in demand from China, price sensitivity in the Middle East and North Africa, and the emergence of new markets in Southeast Asia.

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