Milk prices in Galicia have surged in recent months due to low production and the dairy sector’s push to prevent shortages. Large producers secure better terms than smaller farms, a situation that concentrates volume and influence. The concerns were presented by Roberto García, Secretary General of the Agricultural Unions, supported by data from the Ministry of Rural Affairs. He warns that many small and medium farms are closing as inflation is trimmed to the millimeter, with limited generational renewal on the horizon.
According to figures from the Galician Statistical Institute covering January to November 2022, the price gap between small and large farms widened considerably across the community.
At the start of the year, farms with milk quotas above 700,000 kilograms fetched about 36.63 euros per 100 liters, while farms under 100,000 kilograms sold for roughly 31.48 euros per 100 liters. The gap of 5.15 euros narrowed to 10.73 euros in recent weeks, with large farms earning 59.04 euros per 100 liters and smaller farms around 48.31 euros per 100 liters.
In other words, the larger players earned roughly 22% more for the same output than their smaller counterparts. The industry pays less for six liters from a small farm than for five liters from a larger one, illustrating how scale affects pricing.
Irritability as a decision
It is shocking, says García, that the Xunta and the national government have not acted on this information. He notes that any rise in milk prices among small producers follows a brutal increase in costs that did not reflect in 2021 prices, leading many small businesses to shut down. The crisis pushed production down for the first time in years, heightening concern within the dairy sector. When supply was tight, buyers competed for the largest share of milk, driving prices up. The result: most of the volume moved to large farms. The message is clear—price signals were driven by supply tensions rather than production costs.
Even with a long-standing price gap, the reality remains stark: the higher the cow quota, the more revenue. In November, farms producing 100,000 to 200,000 kilos per year earned about 53.12 euros per 100 liters; those with 200,000 to 300,000 kilos earned 54.62 euros; 300,000 to 400,000 kilos earned 55.79 euros; and 400,000 to 700,000 kilos earned 57.18 euros per 100 liters.
Many small farms are disappearing as production concentrates among those exceeding 500,000 kilos annually. Fewer than 20% of producers account for about 65% of milk output. This same group continues to drift away from the national average price, pushing the sector toward oligopoly. It is estimated that 80% of producers generate about 35% of milk, with prices reaching 58.7 cents per liter—slightly above the Galician average.
Looking ahead, the union secretary general expects prices to stabilize through negotiation, but warns of a possible contradictory effect. The industry worries that a sharp, non-market price floor could speed up retirements among medium-sized and family farms, further shrinking production.
National Court’s first sentences for Cartel will arrive “within weeks”
In July 2019, the National Markets and Competition Commission sanctioned two dairy associations and major dairy companies for anticompetitive practices spanning 2000 to 2013. The first penalties were expected to be announced in the following weeks, as the organization manages thousands of Galician cases, accounting for a large share of Spain’s total filings. There is hope that fines will lead to compensation for farmers who pursued claims in commercial courts, with potential damages surpassing one billion euros in Galicia.
The Dairy Cartel was described as having imposed control over routes, distribution, and an artificial price for milk. If penalties are approved, dairy companies may be required to respond in solidarity to ensure payment guarantees for farmers who pursued claims.