Milk production in Germany deeper in the red

According to figures from the German Federal Institute for Agriculture and Food (BLE), milk production fell by 6,88% in February compared to a year earlier, to 2,39 million tonnes. Adjusted for the leap year, daily production averaged 85.470 tonnes, a decrease of 3,1% compared to February 2023. This continues the downward trend, after a decrease of 1,99% was already recorded in January.

According to BLE data, total milk production in the first two months of the year was 5,2 million tons, down 4,16% from the same period last year. At the same time, milk imports fell by 8,56% year-on-year to 85.470 tons, or an average of 2.254 tons per day, down 5,3% per day from a year earlier.

Shrinking dairy herd
A major factor behind this decline is the reduction in the dairy herd. In November, Germany had 3,59 million dairy cows, a decrease of 3,3% compared to the previous year.

In addition, the ongoing consolidation in the sector is visible in the decreasing number of dairy farms. In November, there were 46.849 dairy farms left, as a result of tight margins, stricter environmental regulations and disease pressure. Small farms in particular are affected and decide more often to close or collaborate. In the period from 2014 to 2024, the number of farms with fewer than 20 cows decreased by 33%, to around 20.000 farms. This increase in scale is expected to continue, as larger farms benefit from economies of scale and greater cost efficiency.

Bluetongue 
The recent spread of the bluetongue virus (variant BTV-3) is contributing to the decline in production. Market research company Gira predicts that this will cause milk production in Germany to fall by 1,7% this year. According to data from the British Defra, a total of 15.372 outbreaks were reported in December. The number of cases peaked in September and has been declining since then. The BTV-3 variant has been detected in all German states.

Milk price
According to DCA Market Intelligence benchmarks for February, the average milk price in Northern Germany was €49,75 per 100 kilos, an increase of 22,5% compared to last year. In Southern Germany, prices even rose by 25% to €51,25 per 100 kilos. The spot market is thus in line with the current payout prices to farmers, which fluctuate around €50 per 100 kilos.

However, costs for labor, energy and feed remain high, putting pressure on dairy farmers' margins and limiting their room for investment.