Romanian dairy farms face closure as raw milk prices fall below production costs

Farm-gate prices fall below costs

Romania’s dairy sector is facing mounting financial pressure as weaker consumption and rising production costs leave farmers selling raw milk at a loss. PSD deputy Florin Barbu and entrepreneur Florin Chirea have warned that more farms could close without urgent measures from the authorities, with consequences for employment and the country’s food-processing industry.

Barbu said on 19 July 2026 that producing one litre of milk costs a farmer approximately 2.30 lei, while the farm-gate selling price is only about 1.80 lei. That represents a loss of roughly 0.50 lei on every litre before accounting for the wider financial strain created by declining demand. He argued that the gap is no longer an isolated commercial problem because prolonged losses could eliminate farms and jobs.

Chirea presented a similar calculation. According to his figures, production costs have reached 2.20–2.30 lei per litre, while the selling price has declined to approximately 1.75 lei. He said the current crisis began in April and described it as the sector’s most severe episode in ten years.

Energy costs and weaker consumption squeeze margins

Chirea identified higher energy prices in their various forms as the main driver of the increase in production costs. Dairy farms require continuous spending on animal care, milking, cooling and other operations, leaving producers exposed when energy becomes more expensive. At the same time, both Chirea and Barbu said milk consumption had fallen in recent months, weakening the market available to absorb production.

The resulting margin pressure leaves farms with limited room to maintain operations. Chirea said many Romanian farms had already closed or were in the process of closing. Barbu stressed that the damage would extend beyond farm owners because employees, families and local communities depend on livestock operations for income.

Processing industry also exposed

The warnings also cover the downstream dairy industry. Chirea said widespread farm closures could push Romanian milk processors toward bankruptcy. A contraction in the domestic supply base would reduce the volume of local raw material available to processing plants, placing additional pressure on businesses already linked to the financial health of their suppliers.

Barbu contrasted the approximately 1.80 lei received at the farm gate with a retail price of around 9 lei per litre. He called for intervention in the milk market, arguing that the large difference between producer and shelf prices is occurring while primary producers are unable to cover their costs. The source does not provide a breakdown of processing, packaging, logistics, retail or tax components within that price difference.

Political dispute over delayed support

Barbu accused the government of failing to respond and said funding intended to support farmers remained blocked. According to him, the necessary amounts are included in Romania’s National Strategic Plan, but the related regulatory acts have been held up in the government for approximately three months. He called for immediate support for sectors considered strategic and warned of risks to Romania’s food security if domestic farms disappear.

Chirea likewise said producers could no longer find effective support from the authorities. The central issue for market participants is the duration of the loss-making period: every litre sold below cost weakens farm liquidity, while closures would also threaten processors that rely on Romanian milk. Without a recovery in consumption, lower input costs or access to the delayed assistance, the pressure on producers is likely to persist.