EU dairy expands in the Philippines as trade deal advances

European dairy is gaining ground in the Philippines, with H1 2026 trade showing stronger EU shipments of milk and cream, whey, fermented products and cheese. The new EU-Philippines free trade agreement could provide further support by removing remaining tariffs and improving market access, although competition from New Zealand, the US and Australia remains significant.On September 22, the EU and the Philippines advanced substantially on the development of their Free Trade Agreement (FTA), with negotiations now moving towards finalisation. For dairy, the agreement is expected to remove remaining import tariffs of between 1% and 7%, while some products, including whey, already enter duty-free.Although current tariffs are relatively low, their removal would improve the competitive position of the EU. New Zealand and Australia already benefit from preferential access through the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA), meaning the agreement would bring EU suppliers onto a more equal playing field. Beyond tariffs, the FTA is also expected to facilitate dairy trade through a clearer framework for sanitary and technical requirements.Philippines is a sizeable market The Philippines is an important dairy importer. In 2025, it imported 259,729 tons of concentrated milk and milk powders, followed by 143,911 tons of milk and cream, 82,789 tons of whey and 67,081 tons of fermented products. Cheese imports reached 56,081 tons, while butter and milkfats were smaller at 27,791 tons.The EU already holds a significant position across these categories. In 2025, it supplied 58% of Philippine milk and cream imports, 41% of fermented products and 36% of whey. Its share was lower in cheese (24%) and concentrated milk and milk powders (17%). Milkfats remained the main exception, with the EU accounting for only 7% of imports, compared with around 80% supplied by New Zealand. European position strengthens, but competition differs by productThe EU continued to strengthen its position in the first half of 2026. Milk and cream shipments increased by 23.7% year-over-year (YoY) to 40,476 tons, maintaining a 57% share of Philippine imports, well ahead of New Zealand (16%) and Australia (13%). EU product also recorded a lower average import value, at $907 per ton compared with $1,035 for New Zealand.Concentrated milk and milk powders moved in the opposite direction. Philippine imports under HS 0402 increased by 6.6% YoY to 135,909 tons, while EU shipments fell by 38.7% to 14,333 tons. As a result, the EU share declined from 18% in the first half of 2025 to 11% in 2026. Meanwhile, US shipments increased by 22.4% to 42,283 tons (31% of the market), while New Zealand increased by 28.3% to 29,919 tons and Indonesia by 41.8% to 27,921 tons.European suppliers also gained ground in fermented products and whey. EU shipments of fermented dairy increased by 14.8% to 16,256 tons despite a 6.6% contraction in Philippine imports, lifting its share to 46%. Meanwhile, shipments from the US and New Zealand declined by 30% and 24.4%, respectively. In whey, EU volumes increased by 22% to 15,935 tons while the overall market remained broadly stable, raising its share to 37%, ahead of the US at 31%.Cheese recorded another notable shift. Imports increased by 6.5% to 28,372 tons, while EU shipments rose by 26.4% to 7,320 tons. This brought the EU and New Zealand each to around 26% of the market, although New Zealand shipments fell by 25.3%. At the same time, EU cheese averaged $3,992 per ton, below New Zealand at $4,740 per ton, but above the US ($3,572) and Australia ($3,669).Butter and milkfats remained the exception. EU shipments increased by 19.1%, but its market share remained at 7%, compared with 79% for New Zealand. New Zealand’s dominant position also persisted despite a higher average import value, at $6,546 per ton compared with $5,020 per ton for EU product.Expanding milk programme supports dairy demandThe Philippines is a key dairy import market in Southeast Asia, with domestic self-sufficiency estimated at just 1%. Moreover, additional opportunities could come from the country’s expanding milk feeding programme.The 2026 School-Based Feeding Program targets around 4.6 million beneficiaries. Although focused on locally produced milk, domestic production remains limited, meaning higher consumption could also support import demand. The EU is well positioned to capture part of this demand, already standing as the country’s main drinking milk supplier, with shipments increasing by 29.1% YoY to 36,562 tons in H1 2026 (HS 0401.20).The FTA could further support European dairy exports by improving market access. However, the agreement is not yet finalised, meaning the extent and timing of these benefits will depend on the final terms and implementation.