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Global dairy prices slip as production swells and demand wanes
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Wednesday, 12 November, 2025, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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Global dairy commodity prices are facing downward pressure as easing demand meets rising supply, according to the latest update from Food and Agriculture Organization (FAO). In October 2025, its Dairy Price Index fell by 3.4%, helping drive the overall FAO Food Price Index down by 1.6% the lowest level observed in over two years.
Key international dairy categories such as butter, cheese and milk powder all registered price drops. The main drivers behind this slide include:
- Robust milk outputs from major producing regions such as Europe and New Zealand, which have outpaced global consumption.
- Weaker demand from major Asian buyers combined with bloated inventories in importing countries.
- A shift in the dairy market cycle: analysts suggest the current trend reflects a correction after two years of high volatility and inflation-driven price spikes.
While consumers in import markets may benefit from more favourable prices, dairy farmers and cooperatives are feeling the pinch. High production costs—ranging from feed to labour—mean the margin squeeze is real for many suppliers. The report stresses that companies and farm operations will need to prioritise efficiency, value-added products, and leaner business models to navigate this phase.
Exporters are being urged to pivot toward emerging markets and innovate with premium dairy lines such as fortified milk powders, speciality cheeses or branded functional dairy products.
For India, a major milk-producing nation with a rapidly evolving dairy sector, falling global dairy prices offer both opportunity and caution. On one hand, the export window could become more competitive if costs are managed well. On the other, domestic processors and farm-gates may need to gear up for the ripple effects of global softness—especially if international supply gluts dampen sentiment or depress margins.
The current dip in dairy prices should not be seen purely as a short-term event. Analysts say the industry is entering a phase where adaptability and sustainability, rather than just production volume, will define success. From mechanisation and digitisation to crop-feed optimisation and diversification into high-margin dairy categories, the coming months will test how well producers and processors across the world adjust to a less inflation-driven, more stable – but tougher – dairy cycle.
As the sector adjusts, all eyes will be on the next FAO update for signals of whether global dairy prices have found a new plateau or are poised for further movement downward.
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