European dairy looks for holistic response to trade challenges

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As Donald Trump takes office in the US, uncertainty and instability in trading relations are intensifying challenges facing the European Union (EU) dairy sector, from geopolitical instability to fewer young farmers, EU experts have told Dairy Industries International (DII).
“While issues such as potential tariffs from the United States, countervailing duties from China and rising production costs can be managed individually, their simultaneous occurrence poses a challenge,” says Laurens van Delft, director trade and economics at the European Dairy Association (EDA). Trump has made varying threats to impose tariffs on EU goods imports to the US, potentially from 1 February, commenting on 21 January: “You can’t get fairness unless you do that;” “They treat us very, very badly. So, they’re going to be in for tariffs.” The US imported 102,754 tonnes of EU-made cheese in 2024 and 45,374 tonnes of butter, according to European Commission figures.
Meanwhile, China is considering imposing countervailing duties on EU-made liquid milk and cream with a fat content higher than 10% and various types of cheese comprising 30% of the EU’s dairy exports to China – worth €1.7 billion in 2023.
These risks come at a bad time for the EU dairy sector says van Delft. “The industry is also adjusting to a major shift in sustainability regulations, which remains a constant concern for our industry. In the short term, high milk prices have offered some respite, and it is expected that these prices will stay relatively elevated,” he continues. “Consequently, the issue of fair remuneration for farmers, a common debate in agricultural sectors, is less pressing for the EU dairy industry.
“However, generational renewal is a critical long-term challenge. With many dairy farmers nearing retirement and fewer young individuals interested in taking over, the industry’s future is uncertain unless measures are implemented to attract the next generation.”
For the EDA, given such challenges, potential disruption in trade could have major implications for the health of the dairy industry in Europe. “The dairy market is closely linked with agricultural production systems, subject to unique regulations, subsidies and sustainability measures. Geopolitical shifts, such as trade disputes with major dairy consuming nations directly impact our industry as well as dairy farmers,” van Delft told DII.
Indeed, opening new markets is essential to reduce dependency on specific trading partners and balance risks from trade disruptions or political instability, he says. As a result, the European Commission must be proactive in tariff negotiations, “to protect the industry from unpredictable tariff changes,” the EDA trade director states.
Such complexities require a targeted approach that considers market access and the preservation of farming practices, he continues. “The challenges are not only economic but also environmental, as the industry must adopt greener practices to meet sustainability targets,” he notes.
The regulatory requirements behind such work make EU dairy producers vulnerable to shifts on trade, as European dairy trade organisation Eucolait has made clear. “Corporate sustainability and due diligence directives have laudable objectives but the additional workload for companies is simply gigantic,” Eucolait said in a November statement on food and agriculture policy priorities.
Alice O’Donovan, Eucolait’s legal and policy adviser, told DII the EU should promote open, rules-based trade, “focusing on synergies, rather than agricultural policy and trade policy being examined in isolation.”
“In the absence of this, open communication with stakeholders and recognising that trade is an indispensable pillar of agricultural policy in its own right would go some way in countering the challenges that lie ahead,” O’Donovan says.
These include possible US tariffs where, “We are in ‘wait and see’ mode. As regards China’s anti-subsidy investigation [following tariffs on Chinese electric vehicles], while we can anticipate that China will announce new duties, we also note the EU is raising the issue at the World Trade Organisation (WTO).”
The European dairy industry is also looking to new agriculture commissioner Christophe Hansen’s ‘Vision for Agriculture’, due mid-February, as “a strong indication of the direction of policy traffic in the next five years.”
A Commission official said “we will not speculate” on potential Trump tariffs but confirmed “consultations started in the autumn on the Chinese countervailing threat and are ongoing. Trade is important for the EU farming community, especially for the dairy sector,” she says. “The EU is the world’s largest exporter of agri-food products, and dairy products, among the flagship products of EU agri-food exports, are amongst its top three exported product categories.” The EU also exports about 20% of its milk solids.
The official says EU trade policy supports the dairy sector by, “protecting geographical indications (GIs) for iconic dairy products, protecting the sector from unfair trading practices, and negotiating trade agreements which reduce or eliminate tariffs and other trade barriers, making it easier for EU dairy farmers to export their products.”
The December 2024 deal with five Mercosur countries: Argentina, Bolivia, Brazil, Paraguay and Uruguay, welcomed by Eucolait and the EDA as, “opening markets previously challenging to access,” is a notable example.
“The Commission believes agri-food interests are best catered for in a wider trade policy,” the official says. “For example, free trade agreements must cover most trade between the parties to be WTO compliant. In addition, sectorial trade policies are deeply interlinked, such as environmental and health policies affecting agriculture.
“Fair competition and market access also require a coordinated approach across sectors,” the official adds. “Finally, trade policy also addresses social and environmental issues, like sustainable agriculture and labour rights. These factors highlight the need for a holistic approach to trade policy.”
Simpler policies
She stressed how Commissioner Hansen “has expressed his intention to keep simplifying policies, so farmers spend less time on paperwork and more time in the fields.”
The CAP further supports young farmers, the official said: “Besides direct payments, strategies generally involve a top-up financial aid to set up an agricultural or rural business.” Hansen also engages with young farmers through a Youth Policy Dialogue and will present a generational renewal strategy this year.
This will please companies such as Danone Global, which told DII: “Generational renewal and the transition to more sustainable food systems are key challenges… and why we are closely working with EU farmers to support them economically and environmentally through our regenerative agriculture programmes.”
Louis Hinzen, senior manager, economic affairs, trade and market access lead at European food industry organisation FoodDrinkEurope (FDE), says, “We are generally happy with the current EU trade policy and encourage policy makers to continue to pursue an open, fair and sustainable trade policy to create new market opportunities, remove trade barriers, better enforce agreements and enhance international cooperation to support a globally competitive and thriving EU food and drink industry.”