'First half of 2026 will be tough' for dairy sector - expert
Northern Ireland Institute of Agricultural Science (NIIAS) members have been told that a recovery in global dairy sector could be six months off.
Leprino Foods Europe chief executive, Paul Vernon made the comments at a seminar hosted by the institute on the morning of the Royal Ulster Winter Fair (December 11).
And it really will be a case of matters getting worse for the dairy sector before they improve, he said.
As all international markets operate on the basis of the push and pull created by supply and demand, milk production levels around the world will have to be cut back quite significantly in order to allow farm gate prices recover.
According to Vernon, the current winter milk bonuses on offer from all the dairies is shielding local farmers from the full brunt of the ferociously negative forces that are impacting on global dairy markets right now.
Meanwhile, the current strength of the beef market is also helping to maintain all-important cash flow levels on dairy farms.
So, in reality, matters could be a lot worse.
Farm gate milk prices
However, the Leprino Foods representative is expecting that the New Year will see this scenario shifting dramatically, with farm gate milk prices in Northern Ireland dropping below cost of production levels at some stage during quarter one of 2026.
Vernon said: “So with consumer confidence weak and milk production volumes high, markets have not reacted well."
He noted that over the past 12 weeks, the diary sector has seen butter prices have fallen by around 32%, cream by 50%, and cheddar by 26%.
He continued: “In many ways, this all adds up to a perfect storm.
"The current outlook is for further downward pressure to impact on markets both within the EU and internationally."
Vernon said that milk output around the world will decrease, adding that "the cure for high prices is high prices".
“We have seen significant milk price reductions of 13p/L impact in Great Britain over the past four months," he said.
“And the same trend is starting to impact in Northern Ireland. Milk prices will weaken.
“But there is little doubt that the first half of 2026 will be tough, where farm gate milk prices are concerned.
“The reality is that we need to see a significant reduction in milk supply prior to farm gate returns improving again.”
