The European Milk Board (EMB) is raising the alarm: developments on the European and global milk market have reached a new level of escalation. Global milk volumes have increased significantly – and are continuing to rise. Such a surge is far beyond normal market fluctuations and is driving the sector straight towards a new severe crisis.

The current easing of Switzerland’s milk market must not detract from the fact that the structural crisis remains unsolved. From the BIG-M point of view, it is now up to the milk producers themselves to demand and adopt a clear supply management scheme, as dairies and retailers are happy to live with the surplus situation.

FAIRMËLLECH is a brand that has emerged from a movement against persistently low milk prices. Following the milk strike, Luxembourg’s milk producers joined forces and, in 2011, founded a cooperative to safeguard fair, cost-covering milk prices for its members. Today, 15 years later, the brand is carried by around 60 dairy farms in Luxembourg. It is still the milk producers themselves who hold responsibility for the cooperative and for the brand.

The Irish Creamery Milk Suppliers’ Association (ICMSA) argues that the Common Agricultural Policy (CAP) has drifted away from its original purpose: supporting food-producing farmers so they can keep affordable, high-quality food flowing to European consumers. Instead of trying to make CAP carry both food security and environmental policy, ICMSA calls for CAP to return to meaningful direct support for active farmers, with environmental objectives funded separately through a Common Environmental Policy.

All contracts are not worth talking about but those that guarantee a price that truly covers production costs, include review clauses and define supply volumes and duration can strengthen the position of producers. The limits of the EGAlim law in France (designed to balance commercial relationships between agricultural producers, processors, and retailers), nonetheless, show that a contract-based system remains imperfect: complex calculation formulas, undervalued costs and the growing disparity among producers demand keen vigilance.

For a contract to be viable and beneficial to producers, there are three simple rules: 

• It must state a price that fully covers production costs and includes decent remuneration and margins for the producer.

• It must include price review clauses (ideally at least every quarter with trend indicators for all cost items).

• It must define the duration and delivery volume to allow for clarity and predictability.

The EGAlim law is not fully effective because:

1. The obligation to cover production costs only applies to the domestic market, which means that for many dairies only 30% of the volume is covered... This is obviously far removed from the announced promises.

2. Review clauses are not always included and when they are, they only apply to 60% of costs (based on price evolutions for fuel, electricity and fertilisers), while the remaining 40% includes other significant cost items such as equipment costs (approx. +6.5% per year) and hired labour (approx. +4.5% per year). 

3. No contingency margins are built in, neither for economic nor climate events. It would be easy to implement as a simple percentage of production costs.

4. The production cost calculation was negotiated downwards, especially on farmer remuneration (EGAlim currently includes € 13 per hour in production costs, far from the hourly pay of € 30 that we advocate for ourselves as farm managers) and CAP subsidies were deducted from production costs. We call for coupled aid for livestock farming to not be deducted, while EGAlim subtracts them entirely, including environmental subsidies that are paid when farms follow best practices.

That being said, we see massive prices differences in France between certain dairies, especially those processing milk for the domestic market, and those for the external market that are in free fall.

FNPL: Base milk price without bonuses in France and Germany, May 2025 to April 2026 (milk at 3.8% fat and 3.2% protein)

FNPL: Ranking of French dairies based on average farm-gate milk prices excluding bonuses and including additional payments for 2025 (milk at 3.8% fat and 3.2% protein)

The best-performing dairies are the ones that have given due consideration to EGAlim provisions in their contracts. 

My personal experience with Nestlé has also been quite good, even if it is far from perfect. Covered by a contract that is 100% EGAlim, with price revisions (Ipampa indicator – purchasing price index for agricultural inputs, editor’s note) notably for fuel and fertilisers, my base milk price is € 480.85 per tonne (3.8% fat and 3.2% protein) for the second and third quarter, excluding seasonability and quality bonuses. After the revision of the Ipampa indicator, farms with a 100% EGAlim contract should be paid € 500 per tonne in the autumn.

Today, you also find good contracts in France for meat with the possibility of fixing a minimum purchase price of € 5.60 per kg without a maximum price. This means that prices can go up, but not any lower. 

Having long-term perspectives for young farmers as well as for investments gives you a greater sense of security and serenity when it comes to your future.

In conclusion, there are good and bad contracts; it’s up to us to use the good ones in order to demonstrate what producer prices need to be. It is also important to be very vigilant while drafting a contract because dairies have legal departments that are more powerful than ours. Any arrangement needs to be simple and effective for producers. Complex price formulas are never in our favour. 

The downside is that the contracts lead to more disparity between producers. There’s fewer of us being paid the same price at any point in time, which makes it difficult to mobilise farmers across the board during major protests. 

It is also important to remember that while the EGAlim law perhaps protects us against dips on dairy markets, it sets out a ceiling in case of price peaks like those in summer 2024/2025. From this point of view, this system is far from perfect. 

Adrien Lefèvre, spokesperson for APLI in France

Farmers’ organisations are outraged: the EU Commission has unconditionally approved the merger of Arla and DMK, thus paving the way for Europe’s largest dairy cooperative. AbL and MEG Milch Board criticise the failure to take the farmers’ concerns into account, and are now demanding detailed monitoring and evaluation of the consequences for milk suppliers.