The Dairy Market in 2025: Between Stability and New Challenges

Developments in the dairy market shape the DMK Group’s business across the entire value chain – from the procurement of raw milk through its processing to the marketing of products at home and abroad. 2025 once again highlighted how closely global market trends, conditions in milk production and consumer behaviour are interlinked. An initially stable market phase was followed, as the year progressed, by rising milk production and growing uncertainties. The generally volatile market conditions brought both new opportunities and additional challenges for the entire sector with them.

Globally, the milk market was clearly on a growth trajectory in 2025. According to estimates by the UN Food and Agriculture Organisation (FAO), global milk production rose to around 992 million tonnes, which was approximately 1.4 per cent higher than the previous year. The main drivers of growth were Asia and South America, but the USA and New Zealand also significantly expanded their production. At the same time, Europe grew more strongly than many market observers had expected. The EU-27 achieved a 1.9 per cent increase compared with 2024, reaching around 148.5 million tonnes of raw milk and thus a new production record.

Germany got off to a slow start to the year

In Germany, the year got off to a more subdued start. Many dairy farms were still grappling with the aftermath of the bluetongue outbreak in 2024; in early 2025, foot-and-mouth disease also caused short-term uncertainty in the export sector. However, there was no sustained disruption to the market. At the same time, prices on the raw material and product markets remained stable, as did sales trends.

Production and quality rose significantly from summer onwards

From the summer onwards, the picture changed noticeably. Good forage quality, favourable weather conditions and investment in modern housing and milking technology led to rising yields in many areas. The otherwise typical seasonal autumn decline in milk volume was virtually absent. Overall, German dairies collected around 32.5 million tonnes of milk in 2025 – approximately 0.9 per cent more than in the previous year. Furthermore, the fat and protein contents of raw milk continued to rise, improving the yield for cheese and butter products in particular.

Demand for dairy products picked up slightly

On the consumer side, too, there was a slight recovery at times in 2025. In the food retail sector, demand for cheese, yoghurt, quark and butter rose again. Cheese, in particular, emerged as a key growth driver both nationally and internationally. Lower inflation and falling energy prices led to a slight increase in consumer spending. However, unsettled by rising unemployment and a rise in corporate insolvencies, the general consumer sentiment among many households remained subdued.

The market came under pressure from autumn onwards

The momentum of the first half of the year was followed by a turnaround. From autumn onwards, the markets came under increasing pressure. Globally, rising milk volumes coincided with a slowdown in demand. Large quantities of butter, cheese and milk powder flooded the market, whilst imports from New Zealand and the USA further exacerbated the situation in Europe. Prices for butter and cheese in particular fell significantly as a result, and spot markets also lost considerable value.

This had direct consequences for farmers. Many dairies significantly reduced their payment prices from September onwards. Regionally, prices fell by around ten cents per kilogramme of milk by the end of the year.

Nevertheless, 2025 remained, on the whole, one of the economically strongest dairy years in recent decades. The average milk price stood at around 51 to 52 cents per kilogramme, well above the previous year’s level and only just below the record high of 2022. With a payment price of 51.4 cents per kilogramme of raw milk, DMK was among the top payers in 2025. The company responded quickly and flexibly to volatile market conditions and consistently focused on efficiency and value creation.

Following the completion of the merger between Arla Foods and the DMK Group on June 1st 2026, DMK will initially form part of the Arla Group as a business unit and will be gradually and fully integrated into the structures and strategic direction of the joint cooperative. The focus will be on working with members and partners to capitalise on the opportunities presented by changing markets, to strengthen the resilience of the business model in the long term, and to expand value creation at an international level. The aim is to secure stable and sustainable long-term prospects for the cooperative’s farmers on this basis.