Why there is too much milk in Switzerland

Switzerland has 126 million kilograms too much milk. Keystone / Gian Ehrenzeller

Switzerland is producing too much milk – and it is too expensive. The industry is responding by cutting milk prices. What this means, and how farmers are reacting.

What is the issue? There is currently an oversupply of milk in Switzerland. According to the milk sector organisation, the surplus amounts to around 126 million kilograms. The organisation recently announced a reduction in the milk price for the A segment – high-quality milk used for products sold on the Swiss market (see second box).

The price will be lowered by CHF0.04 to CHF0.78 ($0.98) per kilogram. The new price will apply for 11 months from February 1, 2026. This is the first time a milk price has been set for almost an entire year. Until now, target prices were usually valid for just three months. The longer period is intended to give producers greater planning security.

How does the organisation justify the price reduction? According to Stefan Kohler, managing director of the milk sector organisation, Swiss milk prices are increasingly higher than prices abroad. Around half of Swiss milk is processed into cheese.

The cheese market is partially liberalised and closely aligned with the European market. If the price gap between Swiss and foreign cheese becomes too large, Swiss products lose competitiveness and risk disappearing from supermarket shelves. The price cut is intended to prevent that gap from widening further.

What are the reasons for the milk surplus? Swissmilk says the surplus is the result of several factors coming together. A summer with very favourable weather conditions led to abundant, high-quality feed, which in turn boosted milk production.

At the same time, US tariffs created significant market uncertainty – not only in Switzerland, but across the European Union. This contributed to falling exports, leaving more milk on the domestic market. Unfavourable currency effects and already high butter stocks added to the problem.

Why milk is expressed in kilograms

The industry speaks of milk prices in kilograms rather than litres. The reason for this is that a litre of milk is not always the same. In principle, a litre is more than a kilogram. In contrast to water, milk still contains protein and lactose, for example. The proportion of these varies, which means that the volume of milk is not a reliable figure.

How does the expert see it? “The entire milk production system was simply left to its own devices,” says Mathias Binswanger, professor of economics at the University of Applied Sciences Northwestern Switzerland.

“The contradictions in agricultural policy are not being addressed. On the one hand, there are incentives to become ever more productive and reduce costs. On the other, this leads to a form of agriculture where cows no longer go to Alpine pastures but are fed with imported feed. What we actually want to promote – grassland-based farming with cows spending the summer on Alpine pastures – risks being lost.”

How the industry divides milk into different segments

The milk sector organisation divides milk into segments A, B and C. These show what the milk is used for and determine the target price.

A segment: Milk is used for high-quality products such as drinking milk, cream or cheese for the Swiss market and achieves the highest price. It is usually determined every three months. Currently CHF0.82 (from February 1, CHF0.78).

B segment: Milk is used in export products or in products for which there is strong foreign competition in Switzerland and is paid at a lower price. Determined monthly. Currently CHF0.53.

C segment: Milk is produced in excess quantities and is processed into world market products such as butter or skimmed milk powder and exported; it receives the lowest price. Determined monthly. Currently CHF0.27.

The target prices serve as a guide for price negotiations and are not guaranteed payout prices.

What do milk producers say? For farmers, the price cut means a significant loss of income. “I will lose around CHF16,000 ($20,092) in revenue over the year,” says Boris Beuret, who runs a dairy farm with 60 cows in canton Jura.

Beuret is also president of the Swissmilk producers’ association. In that role, he supported the price reduction “in the interest of stability”. To reduce production, he plans to adjust feeding practices and has already sent older cows to slaughter earlier than planned.

What happens next? The dairy industry expects supply and demand to rebalance in the coming months. Consumers are also likely to see lower prices. When asked, both Migros and Coop said they intend to pass the price reduction on to customers.

Translated from German using AI/amva/ts