Farming in the North: When the price of milk falls, until the farmer stops complaining

Dairy farming in northern Germany faces a crisis as milk prices have dropped to their lowest levels in years, forcing small farms to close and pushing producers toward automation. In early 2026, farmers received an average of 49.1 cents per kilogram of milk, down sharply from 61.5 cents in the previous year. At times during early 2026, the base price fell below 35 cents per kilogram, leaving many dairy farmers unable to cover their costs, which hover around 44.45 cents per liter. The decline has led to widespread financial strain, with some producers facing losses and others forced to exit the market entirely. The drop in prices follows a surge in milk production, with farmers producing six percent more milk than in the previous year. This increase was partly due to delayed calving caused by foot-and-mouth disease outbreaks in late 2025, which disrupted normal breeding cycles. The oversupply has created a buyers' market, allowing processors to dictate terms and pay lower prices. Farmers are struggling to maintain profitability amid rising input costs, including feed, labor, and energy. In June 2025, two major dairy cooperatives, Arla Foods from Denmark and Sweden, and Deutsches Milchkontor (DMK), Germany's leading dairy company, announced plans to merge. The deal was finalized on June 1, 2026, after approval from the European Commission. The merger created the largest dairy cooperative in Europe under the name Arla, retaining well-known brands such as Milram, Humana, Oldenburger, and Alete while phasing out the DMK brand. The new entity is based in Viby, Denmark, and continues to operate as a cooperative. The consolidation has raised concerns among agricultural groups and dairy farmers, who fear it will further concentrate power in the supply chain. Ottmar Ilchmann, president of the Arbeitsgemeinschaft bäuerliche Landwirtschaft (AbL) in Lower Saxony, warned that the merger would reduce competition and strip farmers of their bargaining power. He argued that the dominance of a single large player would limit farmers' ability to negotiate better prices and conditions. With fewer alternatives within a 200-kilometer radius, the typical range for milk transportation, farmers could face even greater pressure to accept unfavorable terms. Peter Habbena, a dairy farmer from Krummhörn and chairman of the federal association of German dairy cattle farmers (BDM), echoed these concerns. He noted that the merger had removed much of the leverage farmers once held against processors. Without viable alternatives, he said, farmers would be left with little choice but to comply with the demands of a dominant supplier. Habbena emphasized that the situation was already dire, with many small and medium-sized farms struggling to survive. The decline in the number of dairy processing plants in Germany has accelerated over decades. From a dense network of local processors at the turn of the millennium, the industry has shrunk significantly, with nearly half of the original number still operating today. Small and mid-sized farms, which have long defined the rural landscape of northern Germany, have been hit hardest. Many of these operations lack the resources to invest in modern technology or scale up production, making them particularly vulnerable to economic pressures. The financial burden on farmers has driven many to seek alternative strategies, including automation. Some are investing in robotic milking systems to reduce labor costs and improve efficiency. While this shift can help offset some expenses, it requires substantial upfront investment, often beyond the means of smaller farms. As a result, many are being forced out of business altogether, contributing to the ongoing depopulation of rural areas and the transformation of traditional farming landscapes. The future of the sector appears uncertain, with continued low prices and concentrated market power likely to shape the industry for years to come. Farmers are increasingly looking to government support and policy changes to stabilize the market and protect small-scale producers. However, with the current trajectory, the survival of independent dairy farms in northern Germany remains in question.