Fighting its corner in EU agricultural policy
New EU nitrate limits could reduce the size of the Irish dairy herd. Cattle in County Clare. Credit: Bea
While the world watches US president Donald Trump’s disruption of global supply chains through aggressive and unpredictable trade policies, the European Union (EU) dairy industry is already facing several regulatory challenges. Top on the list is assessing the impact of planned revisions to the EU Common Agricultural Policy (CAP) post-2027, notably via a reformed EU Common Market Organisation (CMO) regulation, amending mandatory food contract rules, with reforms first proposed in December 2024 (1, 2) and currently being negotiated by the European Parliament and EU Council of Ministers.
Further CAP reform proposals announced in July 2025 by the European Commission (3), are part of the long-term EU budget, also referred to as the Multiannual Financial Framework (MFF), which underpins CAP expenditure. The new CAP is expected to come into effect on 1 January 2028, continuing until 31 December 2034.
Farmers will “continue to receive secure and reliable income support through a ring-fenced budget of at least €300 billion,” said the Commission, in an explanatory note on the proposal (4). To help farmers cope with so-called disturbances on agricultural markets, the Commission has doubled a planned crisis reserve, now called the ‘Unity Safety Net’ to €6.3 billion, which will be “exclusively reserved for farmers.”
The Commission further promises that while environmental protection and climate action will remain central to CAP funding, the approach will shift from “prescriptive conditions to rewarding positive actions.” This should please the dairy industry faced with demands under the 2021 European climate law (5) to meet global net-zero greenhouse gas emissions (GHG) targets for 2050, with interim 2030 goals aimed at reducing methane and nitrous oxide.
The EU’s current budgeting system of eco-systems and agri-environmental measures will be merged into a single ‘agri-environmental actions’ category, co-financed by member states, the EU executive noted. In addition, a new transition payment worth up to €200,000 will be made available to further support farms shifting to more sustainable models.
A Commission spokesperson argued dairy producers would be comfortable with the changes, given they “largely built on instruments that farmers, including dairy farmers, are already familiar with: income support is largely preserved and streamlined, and coupled support of which dairy farmers substantially benefit is still there along other usual instruments to manage risks or to support investment.”
He also highlighted the “emphasis on generational renewal”. This includes a starter pack for young farmers, helping their access to CAP support.
Meanwhile, the EU executive on 22 December 2025 granted Ireland a three-year derogation starting 1 January 2026 (6) from the EU nitrates directive. This will allow Irish farmers to continue spreading higher levels of nitrogen from manure (up to 250kg/hectare, although reduced to 220kg/ha in many areas). The flexibility will aid its dairy sector in managing waste.
These CAP announcements have received a mixed welcome. The European Parliament’s agricultural and rural development committee said the proposals risk “diluting and dismantling the CAP,” and penalising larger farms in particular (7).
EU food production association Copa-Cogeca, representing all farms and agri-cooperatives including dairy, has gone further, arguing in a campaign launched in September 2025 (8) that the proposals cross red lines, reducing farming budgets 20%, creating more administration and an “unreal income framework”.
Laurens van Delft, director trade and economics at the European Dairy Association (EDA), told Dairy Industries International (DII) that the main challenges were how income support and crisis tools would be structured under the CAP and the design of the next EU multiannual financial framework (MFF) after 2027, “notably how funds are ring-fenced and if governance would become more complex”.
The future CAP’s €300 billion-dedicated income support and €6.3 billion unity safety net for market crises will mean “in principle, greater predictability and a dedicated crisis instrument are positive,” he said. “However, ‘ring-fenced’ funding does not necessarily mean sufficient, particularly in light of inflation and the overall CAP budget structure.”
It is too early to say if these reforms will mean more red tape or delays accessing the new CAP funds, he continued, as this will depend on the final design and outcome of the legislative process: “EDA stresses that any new instruments must avoid additional administrative burden and ensure rapid, predictable access to funds.”
The EDA trade expert added that the sometimes-cited 22% reduction (such as by Copa-Cogeca) in guaranteed EU funding for dairy operations reflects “indicative estimates rather than a confirmed cut, and the final impact will depend on the outcome of the MFF and CAP negotiations.”
He is also concerned about the proposed CMO, which, as drafted, would deliver one-size-fits-all mandatory contracts that “could undermine systems already working well in the dairy sector,” van Delft argued. Dairy farmers say that the text does not properly safeguard the cooperative model that underpins the dairy sector in Ireland and several other member states, he noted.
The industry is also assessing the upcoming EU regulation unfair trading practices (UTPs), helping combat cross-border late payments or cancelled orders in the agrifood sector. Final agreement was expected in February 2026.
Van Delft noted the need for more effective enforcement of harmonised sanctions under the UTP regulation (9), currently suffering “uneven national implementation”. It was also essential to “fix the turnover thresholds”, by removing the current €350 million limit that excludes many dairy processors from its fair-trading requirements.
A Commission official told DII in December that the new UTP rules “are expected to help late payments and cancelled orders for dairy farmers, especially in cross-border cases… and that the regulation with its mutual assistance mechanism should make it easier for authorities to investigate and act when the buyer is in another member state.”
While views may differ on the new CAP, all experts oppose China’s decision, on 22 December 2025, to impose temporary duties from 21.9% to 42.7% on “certain dairy imports” (10).
The claims of China’s Ministry of Commerce that EU dairy imports are being subsidised and hurting Chinese producers, are “unfounded and strongly contested,” said van Delft, while Jukka Likitalo, secretary general of European dairy trade association Eucolait, said the tariffs that concern mainly cream and cheeses would “cause severe harm to the companies concerned and amplify the current downward pressure on dairy prices in Europe.”
Sanne Dekker, manager public affairs for Dutch dairy major FrieslandCampina, cited the main EU dairy regulatory challenges as “trade issues and geopolitics,” as well as “animal health (diseases), climate, environmental and packaging related legislation, and origin and front-of-pack labelling.
“However, I would not say one topic stands out,” she told DII. “We do not necessarily think these challenges are negative or an obligation. They can also, excepting trade issues, be an opportunity for the company and the sector.”
Notes:
