What a difference 12 months make. This time last year milk prices were just above 50 cent/litre.

There was also some positivity about global demand for dairy products. Fast forward to January 2026 and dairy farmers find themselves in a period of uncertainty, with a difficult period predicted for the next few months.

Irish milk production will end up 5-5.5% ahead of 2024 levels in 2025. New Zealand has also seen record milk deliveries in recent months.

Cheap grain in the USA has driven milk production in 2025, with the most recent data putting USA milk production up 3.7%.

Cheap grain has meant that farmers continue to feed at high levels to drive milk output. Ornua say that EU milk production will rise by 1.5% in 2025, with global supply set to lift by over 2%.

Speaking recently on the Irish Farmers Journal stand at the RUAS Winter fair in Lisburn, both Dale Farm CEO Nick Whelan and Lakeland Dairies CEO Colin Kelly were very forthright with their answers to some of the questions put to them on milk price outlook.

Both pointed to increased global production and the fact that current milk prices are still ahead of where the global market is at.

The issue of elevated product inventories was also touched upon in that even after global production falls back into line and a recovery is seen in the market, it could take time for farm gate commodity prices to recover.

Demand also remains flat at the moment, with global dairy markets continuing to feel the effects of sluggish consumer sentiment, especially in foodservice channels.

Global economic uncertainty doesn’t inspire confidence in consumer spending, with all commodities feeling the pinch at the moment.

Up to the end of 2025 the market signals were pointing to a lean period ahead on dairy farms, and analysts were predicting that the best anyone can hope for is for a recovery in the second half of 2026. That said, the most recent Global Dairy Trade (GDT) auction which took place on Tuesday was up 6.3%, the first positive increase since August 2025.

Co-op model

I have often looked with envy at the co-op model through which dairy farmers sell their product, with farmers essentially owning the decisions being made around a board table along with the management team in charge of the co-op.

This doesn’t mean not holding the people in charge to account. Cost reduction measures shouldn’t stop at the farm gate, and co-ops should also be challenged on their costs of doing business.

Milk price reductions in recent months have been communicated and delivered with a level of transparency. Beef finishers on the other hand, have seen 60 cent/kg wiped off beef price in the last six weeks with zero transparency and very few questions answered.

What can dairy farmers do?

Given all the negativity, it’s important to focus on the positives. The fact is that Irish dairy farming continues to be in a very strong position from a cost point of view.

Grassland farming remains at the heart of what we do. This grass-based production has a host of benefits to the milk that we produce, the people who work in the industry, high welfare for the animals on the farms, the surrounding environment and ultimately the bottom line on family farms.

Dairy farming continues to be a positive outlier in terms of attracting young people into the sector.

Higher solids over the last few months have probably shielded some from the true impact of the recent price drop, but this will become very evident in spring 2026.

A very good 2025 should mean there is some surplus cash on dairy farms to deal with the impending downturn. Teagasc have put this buffer at €500/cow to get through this spring.

Dairy farmers have been here in the not-so-distant past, with a 15c/litre drop being seen between average milk price in 2022 and 2023, and they have learned from these swings and how to deal with them.

Cost control will be key, but you need to know your costs to be able to compare to other years and other farms. This will be particularly important in high-cost production systems.

Can non-essential investments be delayed to leave things easier from a cashflow point of view? If there isn’t some form of cash cushion there, talk to your accountant or financial advisor early to sort any short-term credit issues.