José Manuel Andrade, director of the Foundation Juana de Vega, presented an analysis of the Galician dairy sector before the non-permanent study commission on milk pricing in the Galician Parliament on 10 November. He highlighted the strategic importance of the dairy industry for Galicia's economy and rural areas.
The livestock and industrial activities contribute 1.6% to Galician GDP, showcasing a highly professionalised and technologically advanced sector. Galicia ranks among the top ten milk-producing regions in the European Union, producing 42% of Spain's milk. However, it continues to face challenges, with producers receiving some of the lowest prices in the country.
In August 2026, the price differential compared to the rest of Spain reached 3.7 cents per litre, resulting in a loss of €9.9 million for Galician farms in just one month. Over the year, a consistent differential of around 3 cents per litre could mean over €90 million annually that Galician farms miss out on, impacting the rural economy.
Currently, the prices paid to producers are below estimated production costs. In September 2026, the average price of milk was 45.50 cents per litre, while the estimated production costs were 47.4 cents per litre. Nevertheless, the average weighted price for the year stands at 47.90 cents per litre, indicating a near equilibrium situation.
Andrade pointed out significant weaknesses in milk contracting, with 80% of Galician producers holding individual contracts, often of short duration and lacking effective price indexing mechanisms. He emphasised the need for Galicia to generate more added value, as only 61.5% of the milk produced is processed within the community.
Spain faces a growing trade deficit in dairy products, reaching 2.91 million tonnes equivalent in 2025, with cheese imports accounting for 61% of the total. This situation highlights the potential for increasing the production of higher-value dairy products in Galicia.
The Foundation Juana de Vega proposed ten key actions aimed at enhancing transparency and compliance with the Food Chain Law, establishing objective production cost references, promoting more stable contracts, strengthening the negotiating power of farmers, and boosting industrial transformation and differentiation of Galician dairy products.
The intervention underscored the need to address the sector's challenges comprehensively, focusing on both the profitability of farms and the functionality of the entire value chain. The ultimate goal is to ensure a competitive Galician dairy sector with viable farms, an industry capable of generating more added value, and a more equitable distribution of that value.
The report underpinning this presentation will be available in the Publications section of the Foundation's website in the coming weeks.
