Germany’s milk output drops in February

Germany's milk production is on a steep decline in February. Despite elevated milk prices, high production costs, and the spread of the bluetongue virus are maintaining pressure on dairy farmers.Germany’s milk production declined by 6.88% year-over-year, reaching 2.39 million tons in February, according to the German Federal Office for Agriculture and Food (Bundesanstalt für Landwirtschaft und Ernährung, BLE). Adjusted for the leap year, daily production averaged 85,470 tons, representing a 3.1% decrease compared to the previous year. This suggests a continuing downward trend in production, widening the gap already observed in January (1.99% year-over-year decline).According to BLZ data, total milk output for the year to date (January–February) stands at 5.2 million tons, which is 4.16% lower than the same period last year. Meanwhile, milk imports fell by 8.56% year-over-year to 85,470 tons, or an average of 2,254 tons per day, reflecting a 5.3% daily decline from the previous year.A key factor contributing to this production decline is the shrinking dairy herd. In November, the number of dairy cows stood at 3.59 million, a 3.3% decrease from the previous year.The ongoing consolidation of the dairy sector is also evident in the declining number of farms. In November, there were 46,849 dairy farms, reflecting the effects of tight profit margins, stricter environmental regulations, and disease outbreaks. Small farms have been particularly affected, leading many to either merge or exit the market. Between 2014 and 2024, the number of farms with fewer than 20 cows fell by 33%, to 20,000 farms. This consolidation trend is expected to continue, as larger farms benefit from economies of scale and improved cost efficiency.Incidence of the bluetongue virusFurther declines in milk production are associated with the incidence of the bluetongue virus. Dairy market consultancy Gira forecasted a 1.7% annual decline in the German milk production because of the bluetongue virus. In December, the British Department for Environment, Food and Rural Affairs (Defra) had identified a total of 15,372 outbreaks in Germany. The number of reported cases peaked in September and declined afterwards. So far, the reports indicate the presence of the BTV-3 variant in all of Germany’s states.Milk prices remain strongMeanwhile, spot milk prices in Germany remain elevated. According to DCA Market Intelligence’s February benchmarks, milk prices averaged €49.75 per 100 kilo in Northern Germany, increasing by 22.5% year-over-year. In Southern Germany, prices increased by 25% over the previous year to €51.25 per 100 kilo. The spot market is in line with the farm gate prices, which are moving around €50 per 100 kilo. Despite the high prices, expenses for labor, energy, and feed are expected to remain high, limiting margins for milk producers and their potential to invest in milk production.