Market evolution: Liquid milk (CN 040120) — 2015–2025

Introduction

This report examines the external trade dynamics of the European Union in liquid milk and cream with a fat content between 1 % and 6 %, not concentrated nor sweetened (CN 040120) over the period 2015–2025. The code covers four sub-headings that distinguish between retail packs (≤ 2 litres) and bulk shipments, and between lower-fat (1–3 %) and higher-fat (3–6 %) products. The EU has remained a net exporter throughout the period, yet the trade surplus has narrowed considerably. Three structural shifts stand out: (i) a surge in import value that outpaced export growth, (ii) a pronounced geographic reorientation of export destinations, and (iii) a sharp price increase centred on 2022 that reshaped trade values without a commensurate rise in volumes. Each of these dynamics is examined in detail below.

1. A net exporter whose surplus is eroding

Trade balance declined by almost a quarter despite higher revenues

Throughout 2015–2025, EU exports of CN 040120 exceeded imports in value terms, confirming the bloc's structural role as a net supplier of liquid milk to world markets. However, the trade surplus shrank from €266 million in 2015 to €206 million in 2025 (–22.7 %), having peaked at €472 million at an intermediate point. The main driver was a 126.9 % rise in import value (from €173 million to €393 million), far exceeding the 36.2 % increase in export value (from €439 million to €598 million).

Imports grew in both volume and price, narrowing the gap with exports

Export volumes rose only modestly (+9.4 %) and were in fact lower than the 2021 peak of 1,122 thousand tonnes, suggesting that the EU's physical shipments have plateaued. By contrast, import volumes grew by 38.8 % (to 744 thousand tonnes), and import unit prices rose by 63.4 % (from €323/t to €528/t). The faster price appreciation on the import side is largely explained by the dominant role of the United Kingdom, whose shipments into the EU carried progressively higher unit values over the period. The net import reliance indicator remained negative (confirming net export status), but moved from –0.4 % to –1.6 %, indicating that the EU's external surplus has become thinner relative to the size of its domestic market.

EU dairy production volumes declined while values increased

At the production level, EU output of CN 040120 fell from approximately 25.8 billion kg in 2015 to 21.0 billion kg in 2025 (–18.6 %), even as the value of that production rose from €12.2 billion to €14.7 billion (+20.0 %). This combination of lower volumes and higher values points to a sustained increase in domestic milk prices, consistent with the global dairy price cycle. At the same time, the trade intensity of the product rose from 2.3 % to 6.3 % and the export propensity from 1.4 % to 4.1 %, signalling that the EU dairy sector has become more reliant on extra-EU outlets for this product even as domestic production contracted.

2. Shifting geographies: a diversifying export portfolio against a UK-dominated import base

EU imports of liquid milk are overwhelmingly sourced from the United Kingdom

The import side is dominated by the United Kingdom, which accounted for €384 million of the €393 million total import value in 2025 — a share of roughly 98 %. The import Herfindahl-Hirschman Index (HHI) stood at approximately 9,600 throughout the period, confirming extreme concentration. This reflects the deep integration of the UK–EU dairy supply chain: Northern Ireland and Great Britain continue to ship substantial volumes of liquid milk into Ireland, France and the Benelux countries. Within the EU, Ireland was by far the largest importing Member State, receiving €383 million in 2025 (+134.5 % versus 2015). Other, far smaller import origins include Bosnia and Herzegovina, Norway, Serbia and — increasingly — China and Ukraine, but their combined share remains marginal.

Export destinations have shifted markedly toward Asia and emerging markets

On the export side, the geographic picture evolved considerably. China remained the single largest extra-EU destination, but its share fell from €152 million in 2015 to €121 million in 2025 (–20.5 %), having peaked at €334 million in an intermediate year. Meanwhile, several fast-growing markets emerged:

The Philippines (+974 %) and the Republic of Korea (+2,571 %) stand out as the most dynamic growth stories, reflecting rising Asian demand for European dairy. Conversely, exports to Libya collapsed (–81.3 %), likely linked to ongoing political instability. The export HHI fell from 1,590 to 979, confirming that EU exports became meaningfully more diversified over the decade.

Within the EU, Germany and Poland are the leading exporters, while Ireland's role is asymmetric

At the Member-State level, Germany remained the largest exporter throughout (€178 million in 2025), followed by Poland, which more than tripled its exports (from €44 million to €130 million). Ireland presents a striking asymmetry: it was the EU's largest importer (€383 million) and a rapidly growing exporter (from €20 million to €92 million, +351 %), reflecting the country's role as a transit and processing hub for cross-border milk flows with the United Kingdom. France and Italy, by contrast, saw their exports decline, consistent with the specialisation data showing both countries have a strong revealed comparative disadvantage (negative RSCA) in CN 040120.

3. Prices, shocks, and volatility: the 2022 inflection

A structural price increase took hold after 2021

Unit prices for both exports and imports rose steeply between 2021 and 2022 and have remained elevated since. EU export unit prices moved from a trough of €557/t to a peak of €769/t, while import unit prices accelerated from €285/t to €538/t. The 2022 spike is broadly consistent with the global commodity-price surge driven by the post-COVID recovery, the Russia–Ukraine war and elevated energy/feed costs. All four product sub-headings experienced price increases, though retail-pack products (CN 04012011 and 04012091) consistently commanded higher unit values than their bulk counterparts — a premium that widened over time.

Export-price shocks were concentrated in a handful of destinations in 2022

The shock detection analysis identifies three statistically significant export-price shocks, all centred on 2022:

These events coincide with the broader commodity-price cycle but were amplified in specific markets — likely reflecting a combination of freight-cost pass-through, currency movements and reduced competition from alternative suppliers. The Republic of Korea and Viet Nam subsequently became structurally more expensive EU export markets, as seen in the persistently higher unit prices in 2023–2025.

Volatility profiles differ markedly between stable and episodic trade relationships

The coefficient of variation (CV) of bilateral trade values reveals a clear divide. On the import side, the UK–EU flow is highly stable (CV = 0.13), reflecting mature, long-term supply arrangements. By contrast, import flows from China (CV = 1.88), the United Arab Emirates (CV = 2.22) and Taiwan (CV = 1.73) are extremely volatile — likely representing opportunistic or small-scale shipments rather than structural trade. On the export side, Switzerland (CV = 0.10) and Mauritania (CV = 0.21) are the most stable partners, while Belarus (CV = 1.19) and the Republic of Korea (CV = 0.89) exhibit high variability, consistent with their episodic and demand-driven nature.

Conclusion

Over the 2015–2025 decade, the EU's trade in liquid milk (CN 040120) underwent a significant transformation. While the bloc remained a net exporter, its surplus narrowed as import growth (+127 % in value) far outstripped export growth (+36 %). The import side is overwhelmingly shaped by flows from the United Kingdom, a structural feature that has persisted through Brexit and shows no sign of diminishing. The export side, by contrast, has become markedly more diversified: the HHI fell by 38 %, and new growth poles emerged in East and Southeast Asia (Philippines, Korea), partially compensating for the decline in traditional North African markets (Libya). The 2022 commodity-price shock left a lasting imprint on unit values across all sub-segments, with retail-pack products sustaining a widening price premium over bulk shipments. Looking ahead, the combination of declining domestic production volumes, rising trade intensity and continued UK import concentration suggests that the EU's liquid-milk trade is becoming both more globally integrated and more exposed to external price and supply dynamics.