EU milk surplus drives prices lower as Slovak dairy processors face margin squeeze
Higher raw milk production across the EU is pushing down prices for drinking milk and butter. Slovak processors warn that energy, packaging and labor costs remain high, forcing some products to be sold below production cost.
Milk production rises across the EU
A sharp increase in raw cow’s milk production is driving down dairy prices across the European Union, creating cheaper offers for consumers but eroding margins for processors. Topky.sk reports that the same trend is visible in Slovakia and the Czech Republic, where some retail promotions have priced a liter of long-life milk below packaged water.
Zuzana Nouzovská, secretary-general of the Slovak Dairy Association, told Topky.sk that EU milk production had increased by approximately 4% year on year. Production also rose by 4% in the Czech Republic and by 7% in Germany. Slovakia recorded an even faster increase, with output in the first half of 2026 running 8% above the same period of the previous year.
The additional supply is putting direct pressure on prices for basic dairy products. According to the association, retailers are using the surplus to intensify competition both among dairies and between supplying countries. Drinking milk and butter have become prominent promotional products, transferring much of the immediate benefit to consumers.
Lower input prices do not close the cost gap
Farm-gate prices for raw milk have declined in recent months, but processors have not seen equivalent relief across their broader cost base. The Slovak Dairy Association said expenditure on energy, packaging and labor remains high and, in some cases, continues to rise. This has widened the gap between processing costs and the prices dairies can obtain from retailers.
Nouzovská said some processors are selling individual products at a loss simply to retain their place on store shelves. The pressure therefore extends beyond dairy farmers receiving lower milk prices. Processing plants must absorb the cost of converting, packaging and distributing the surplus while competing for retail contracts in a market where chains can demand increasingly aggressive terms.
The association warned that this imbalance threatens the entire milk sector, with dairies facing the most immediate economic risk. Processors cannot keep selling dairy products below production cost over an extended period, and the association does not expect compensation from either the Slovak government or the EU. Continued losses could eventually affect processing capacity and producers’ access to stable buyers, although no plant closures or production cuts have yet been reported.
EU considers changes to trading rules
Dairy industry representatives met European Commissioner for Agriculture Christoph Hansen last week to discuss the pressure on the sector. According to the Slovak Dairy Association, Hansen acknowledged the legitimacy of their concerns and confirmed that the European Commission was preparing steps to update the directive on unfair trading practices.
The next few months will show whether supply and prices begin to rebalance. Nouzovská said the market’s direction should become clearer at the beginning of autumn. A gradual price recovery would ease pressure on processors, while continued surplus production and low retail prices would deepen the crisis for Slovak and other European dairies. For producers, processors and buyers, the central issue is whether demand can absorb the additional milk before prolonged losses weaken the industry’s capacity.
