IFCN: Poland and the EU have already lost the global milk cost race

Poland can still compete on milk production costs inside the European Union, but on world markets the advantage has clearly moved to cheaper producers, Łukasz Wyrzykowski, director general of IFCN, said in an interview published by farmer.pl. The assessment lands alongside a message from the European Commission, reported by topagrar.pl, that European dairy should stop trying to win on price at all.

Poland's cost edge inside the EU is narrowing

On larger units the gap with Western Europe has effectively closed. “If we compare this with costs in Western Europe, even with Germany, these costs on farms of 200, 300 cows or even larger are really very similar,” Wyrzykowski said. Poland retains small advantages in land and purchased feed, but he described them as minimal. Labour is still cheaper, and converging as well.

The comparison with the largest non-European producers is harsher. In countries such as Argentina, the United States and New Zealand, costs are 20–30% lower and production scale is far higher. “If we compare Poland, Germany and other countries, France and so on, on a global scale, we have lost this game,” he said, adding that the EU can still compete on cost internally, while world markets were lost long ago.

Three cost blocks will keep the pressure on, according to Wyrzykowski: land, as agriculture competes with other industries in a growing economy; labour, with worker shortages and the trajectory of the minimum wage; and capital, where the cost of and access to investment loans remains, in his words, a very big question mark. “All of this will accumulate slowly and these costs will rise,” he said.

Butter exposed the structural gap

Butter is the example he uses for risk. Prices only work when global fat supply is short, as they did two or three years ago, when Polish quotations were very high. Since then, overproduction of milk in Poland, across the EU and in the United States has pushed prices back down. When European butter was above €8,000 per tonne around a year ago, US product reached the continent through the port of Rotterdam; Polish dairy chief executives told him they could not control those flows, and the additional supply shaved European prices while remaining profitable for the exporter even after duty.

The conclusion is that price peaks combined with tight local supply are precisely when lower-cost competitors enter the European market. Wyrzykowski also points to a structural shift within Europe itself, with production gradually moving from west to east. Poland gains from that: it has space, land, human capital and a dairy tradition, and his firm reports numerous inquiries about investment projects and strategic analyses in the country. Argentina and Brazil are, in his view, the next growth region, but with their current quality and technology they will target African and Asian markets rather than compete on high-quality branded or sustainability-led products.

His prescription for Europe is specialisation in high-margin finished products, maximising profit from every litre rather than chasing volume, tracking demand such as the global appetite for protein, and promoting European products on developed markets — with the EU itself remaining the most important outlet.

Brussels: trustworthy milk, not the cheapest milk

Pierre Bascou, deputy director-general of DG AGRI at the European Commission, set out a similar direction at the 23rd International Forum of the Dairy Community in Białystok, topagrar.pl reported. The EU dairy sector generates almost €20bn a year in trade surplus on dairy products, he said, but long-term competitiveness cannot be taken for granted. He listed the main pressures on the sector:

• volatility in energy, feed and fertiliser prices, which compresses margins and farms' capacity to invest;
• climate change as a present, not future, problem — heatwaves, heat stress, drought, water scarcity and extreme weather affecting animal performance and feed availability;
• animal disease, including bluetongue and foot-and-mouth disease, with the associated economic losses and trade disruption;
• generational renewal, described as particularly difficult in the livestock and dairy sectors, compounded by a shortage of rural workers and specialists, including veterinarians.

“Our competitive advantage cannot be based on costs alone. Our strength lies in combining productivity with quality, innovation, resilience, sustainability and consumer trust,” Bascou said. The Commission wants to develop financial instruments to improve the livestock sector's access to capital, and faster, more predictable permitting, which he linked to quicker modernisation and lower risk. He also sees revenue in the circular economy: whey as a source of high-value protein, manure processed into biogas and biofertilisers, water reuse and digital tools to cut energy use.

On trade, Bascou said European producers should not bear the cost of higher standards while competing with imports made under significantly different conditions. The Commission is pursuing negotiations with India, Australia and South-East Asian countries, following earlier work on Mercosur, Mexico and Canada, and plans more trade missions and promotion abroad. Investment priorities named include automation, robotics, artificial intelligence, digital production, resource efficiency and clean energy — relevant given labour shortages. “Our competitive advantage will not be producing the cheapest milk, but producing the most trustworthy milk,” he said. The open question for farms is whether the market will actually pay for the higher standards it demands.