Irish milk production increases in October

Ireland closed October with a clear acceleration in milk output, reinforcing a positive development in 2025. This production momentum contrasts with a sustained price, which, coupled with further requirements from the nitrates derogation extension, is shaping a more complex transition of the sector toward 2026.Milk production in Ireland reached 729,020 tons in October, increasing by 5.18% compared to the previous year. This was a clear acceleration from the stability observed in September (+0.7%), consolidating the positive production trend observed throughout 2025.On a year-to-date (YTD) perspective, milk output increased by 5.65% over the previous year to 8.32 million tons as of October, supported by a strong performance in spring and summer. In a broader European context, Ireland continues to stand out as one of the few major dairy producers recording sustained growth, while several other EU countries face stagnation or contraction due to structural pressures, regulatory constraints, and herd reductions.Despite the higher volumes, fat and protein contents declined by 1.2% and 1.0% year-over-year, respectively, although both improved compared with the previous month. Nonetheless, the increase in volumes outweighed the nutrient decline. As a result, YTD milk solids production rose by 6.11% compared to the previous year to 653,260 tons as of October, increasing the availability of solids for processors.Prices continue to weaken amid ample supplyIn contrast with production growth, farmgate prices continued to decline, according to Eurostat data. Milk prices averaged €49.63 per 100 kilo in October, falling 4.3% from the previous month and 20.14% from the previous year. While the sharp annual decline reflects the elevated price baseline in 2024, the monthly decrease showed that price pressure persisted throughout 2025.Price cuts by Irish processors reflect the ample milk availability observed in domestic and international markets. As base prices approach estimated national production costs, margins are contracting for farmers despite solid output levels.Nitrates derogation was extended under tighter conditionsIreland’s dairy sector remains influenced by the nitrates derogation framework. In December 2025, the European Commission decided to extend Ireland’s existing derogation until 31 December 2028, allowing the application of manure above the standard EU limits for certain grass-fed farms, although stricter conditions are considered.While water quality indicators remain broadly favourable in the country, the Commission identified persistent nitrogen challenges at the Barrow, Slaney, Nore, and Blackwater river basins. As a result, the extension includes further requirements, such as tighter chemical nitrogen allowances from 2028 in high-risk areas, wider buffer zones along surface waters, stricter nutrient distribution rules on fragmented farms, and increased storage capacity for slurry and soiled water.According to the Commission, the derogation extension is temporary and conditional. By 2028, Ireland needs to complete a thorough environmental evaluation, following the guidance from the Court of Justice of the EU in a pending case on the interpretation of EU environmental law. In the short-term, this implies that the derogation will not restrict Ireland’s production model, continuing to allow relatively high stocking rates compared with other EU member states. However, this raises concerns about the new compliance obligations for 2028. derogation farms, including enhanced nutrient planning, training requirements, monitoring, and administrative controls.Outlook: strong volumes, constrained incentivesLooking ahead, market expectations point to continued price pressure into 2026, with base milk prices widely expected to remain in the 36 to 38 cents per liter range. While October’s milk and solids output remains strong, lower prices and a more demanding regulatory environment are creating a shift in incentives, increasingly supporting consolidation and efficiency instead of further growth.