Market evolution: Fresh milk and cream (CN 0401) — 2015–2025

Introduction

Fresh milk and cream (CN 0401) covers liquid milk and cream products that are neither concentrated nor sweetened, spanning four sub-headings by fat content (≤1%, 1–6%, 6–10%, and >10%). The EU trade dashboard provides data for the period 2015–2025, during which the EU's external trade in this product category underwent substantial transformation. Over the decade, the EU consolidated its position as a major net exporter of fresh milk and cream, with the trade surplus growing from €555 million to nearly €1.0 billion. However, the dynamics behind this growth were far from uniform: prices rose sharply, volumes evolved more modestly, traditional trade patterns were disrupted by Brexit and the COVID-19 pandemic, and new export destinations emerged in Asia and Africa. This report examines these developments across three principal dimensions — the macro-level value-price dynamics, the geographic reorientation of trade flows, and the structural shifts in production and product composition.

1. A Surplus Built on Price Inflation Rather Than Volume Expansion

The EU trade surplus nearly doubled in value but only modestly in volume

Between 2015 and 2025, the EU's trade balance for CN 0401 grew from €555 million to €1,000 million (+80%). Yet the underlying volume picture tells a more nuanced story:

Export value nearly doubled, but export volume grew by only 8.4%. This means that roughly 85% of the value growth was driven by higher unit prices rather than by selling more milk abroad. Similarly, import value more than doubled (+133.9%), but half of that increase came from rising import prices (+66.6%) and the other half from a 40.3% volume increase.

Export prices peaked in 2025 while import prices accelerated from a lower base

EU export prices climbed from €771/t in 2015 to a peak of €1,394/t in 2025, with a particularly sharp jump in 2022 (coinciding with the global energy and food-price shock). Import prices followed a lower trajectory — starting at €402/t in 2015 and reaching €670/t in 2025 — reflecting the fact that much of the EU's imports come from lower-cost neighbouring countries. The growing price gap between exports and imports (from €369/t to €724/t) contributed to the expansion of the trade surplus on a per-unit basis.

The EU remains structurally self-sufficient in fresh milk

The net import reliance indicator remained consistently negative throughout the period, meaning the EU is a net exporter. It moved from −0.3% in 2015 to −4.3% in 2025 (with a trough of −5.9% around 2021–2022), indicating that the EU's external dependence on fresh milk imports decreased over the decade. This is consistent with a large and mature dairy sector that increasingly looks outward for demand.

2. Geographic Reorientation: Brexit, the Rise of Asia, and Diversified Export Destinations

The United Kingdom dominates EU import flows — a post-Brexit structural shift

The United Kingdom accounted for the vast majority of EU fresh milk imports, rising from €218 million in 2015 to €511 million in 2025 (+134%). The concentration of imports from the UK is starkly reflected in the Herfindahl-Hirschman Index (HHI) for imports, which remained at a very high level (around 9,100), indicating extreme supplier concentration. This is largely explained by geography: fresh milk is a perishable, low-margin product where cross-border trade is heavily shaped by proximity. Ireland, as the EU member state sharing a land border with the UK, accounted for €462 million of EU imports in 2025 (top reporters), up from €183 million in 2015 — reflecting the continued deep integration of Irish and British dairy supply chains, even after Brexit.

EU exports diversified with strong growth in Asia and emerging markets

While the United Kingdom remained the second-largest EU export destination (€125 M → €209 M), the most striking development was the rise of Asian markets:

• China became the EU's largest single export market for fresh milk, growing from €231 million in 2015 to €400 million in 2025 (+73.1%), having peaked at €704 million around 2021–2022.
• South Korea saw explosive growth from €12 million to €181 million (+1,369%).
• The Philippines grew from €11 million to €77 million (+620%).

The geographic diversification of exports is confirmed by the declining HHI for exports (from 1,237 to 1,118 on a value basis), indicating a less concentrated — and therefore more resilient — export portfolio.

Within the EU, France and Germany lead exports while Ireland's role expanded sharply

Looking at EU member states as exporters, France and Germany have consistently been the top two exporters. However, the most notable growth story is Ireland, whose exports surged from €48 million to €221 million (+365%), reflecting both the expansion of Irish dairy production and Ireland's role as a conduit for UK–EU milk trade flows. Poland also emerged as a significant exporter (€53 M → €145 M, +177%), consistent with the broader expansion of the Polish dairy sector.

3. Structural Shifts: Declining Production Volumes, Rising Product Values, and Specialisation Patterns

EU production volumes fell while production values rose substantially

According to production data, EU domestic production of fresh milk and cream (CN 0401) in volume terms declined from 33.6 billion kg in 2015 to 29.7 billion kg in 2025 (−11.5%), having troughed at 29.0 billion kg. Meanwhile, production value increased by 51.4% (from €17.8 billion to €26.9 billion). This divergence — falling volumes but rising values — points to a combination of higher raw milk prices and a structural shift toward higher-value product segments (such as cream and higher-fat products).

The mid-fat segment (040120) dominates both trade flows, while high-fat cream (040150) is the value growth engine

The product segment breakdown reveals that the 040120 sub-heading (milk and cream with 1–6% fat content — essentially standard drinking milk) dominates both imports and exports by volume:

Several structural shifts are visible:

• High-fat cream (040150) is the fastest-growing segment. EU exports of >10% fat cream grew from 134,333 t to 231,785 t in volume (+73%), but their value more than tripled (€283 M → €881 M), driven by both higher volumes and higher prices (€2,107/t → €3,801/t). This segment now represents over half of all export value despite accounting for a smaller share of volume.
• Skimmed milk (040110) exports are declining rapidly — from 148,026 t to 71,259 t (−52%), consistent with lower global demand for liquid skimmed milk and a structural shift in EU dairy processing toward cheese and butter.
• Imports of high-fat cream (040150) surged from 19,830 t to 47,395 t, suggesting growing EU demand for cream products that may not be fully met by domestic production in certain regions or seasons.

Specialisation patterns reveal a two-speed EU dairy landscape

The specialisation analysis for 2025 shows that smaller EU member states — particularly the Baltic states (Latvia, Estonia, Lithuania) and Luxembourg — have the highest revealed comparative advantage (RCA) in fresh milk exports. These are countries with smaller total economies where dairy represents a proportionally large share of their export basket.

Conversely, larger economies such as Ireland, Italy, and Greece show negative specialisation scores (low RCA), indicating they are net importers of fresh milk relative to their overall trade. Italy's position is particularly noteworthy: despite having the third-largest dairy sector in the EU, its fresh milk exports are minimal compared to its overall trade profile, likely because Italian dairy production is heavily oriented toward cheese (Parmigiano Reggiano, Grana Padano, Mozzarella) rather than liquid milk.

Price shocks in 2022 reflected the global energy and food crisis

The volatility and shock analysis identifies three notable price shocks centred on 2022:

All three shocks occurred in 2022 and took the form of abnormal price increases, consistent with the broader global commodity price surge driven by the Russia–Ukraine conflict and post-COVID supply chain disruptions. The UK shock is particularly significant given it represents 17.2% of EU export value — a 51% price jump in the EU's second-largest market would have had a material impact on overall trade revenues.

Conclusion

Over the 2015–2025 period, the EU's fresh milk and cream trade evolved substantially. The headline figures — a near-doubling of the trade surplus to €1 billion and a 96% increase in export value — are impressive but mask important structural dynamics. First, price inflation rather than volume expansion was the primary driver of value growth, with export prices rising 81% against an 8% volume increase. Second, the geographic landscape of trade shifted markedly: while the UK remained central to both imports and exports, Asian markets (China, South Korea, Philippines) emerged as major growth destinations, reducing the EU's export concentration risk. Third, the product mix tilted toward higher-fat, higher-value cream products (040150), while exports of skimmed milk declined — a trend consistent with evolving global consumer preferences and the EU dairy sector's strategic focus on higher-margin products. Looking ahead, the EU's strong self-sufficiency in fresh milk, its diversified export base, and its growing specialisation in premium cream products position it well, though the sector remains exposed to global commodity price cycles and geopolitical disruptions in key supply chains.