The Azores Agricultural Federation (FAA) fears that Lactogal’s announcement of a 3-cent-per-liter reduction in the price paid to producers, effective January 1, 2026, on the mainland, will cause a “chain reaction” that will lead to declines in the rest of the industry.

“In a context where everything is increasing and there is a labor shortage, how can the industry justify decreases in the price of milk paid to producers? Where does it want to take producers?” asks FAA president Jorge Rita.

According to the Federation, this is a “unilateral decision” that “immediately affects a large percentage of producers.”

The president of the Association of Young Farmers of Terceira, Diego Aguiar, argued in a recent interview with DI that next year “there could be a crisis in the milk sector, with price drops for producers.”

He considered it necessary to wait and see how things develop over the coming months. “Let’s wait and see… There is a surplus of milk, especially in northern Europe, but then that may affect certain markets and not others. So, it’s not certain yet,” he said.

Diego Aguiar also presented meat as an alternative. “Our industries are well aware that if prices fall, producers have other mechanisms to turn this around, mainly the conversion from milk to meat and support for reducing milk production. These are measures that, in a way, end up harming the industry, which receives less raw material and may have to raise prices,” he said.

The new dairy factory in Terceira is also expected to open in 2026. “In principle, we have two new investors, strong players who have come on board. According to the information I have, the factory is now in its final stages and will go ahead. It is another competitor, another player in the market, which only benefits producers. Competition is always good, whether in milk or in any other area,” he added.

In recent days, the FAA had already warned of this scenario and, through its president, called for “common sense” from the industrial sector, pointing out that the prices paid to Azorean producers are the lowest in the country.

The Federation stresses that many producers are on the “brink of survival, unable to bear expenses or invest.”

“The FAA reiterates its commitment to defending producers and rejects any reduction in the price of milk at production, announcing that, if this decrease occurs in the Azores, it will activate the necessary defense mechanisms to counter what it classifies as an unjustified attack on regional agriculture,” the organization’s statement reinforces.

Adding to the uncertainty is the threat of cuts in European Union funding. “The seriousness of this decision is reinforced by recent proposals to revise the Common Agricultural Policy (CAP), which point to a 20% reduction in funding for the next European Financial Framework (2028-2034) and the abolition of POSEI, which would be integrated into a cohesion fund managed by the state, with a total loss of regional autonomy,” it warns.

“The decline announced by Lactogal compromises the economic viability of farms, demotivates producers, accelerates the abandonment of the activity, and jeopardizes the future of milk production. The Federation points out that the prices charged by the industry in the islands have never kept pace with the increases recorded on the mainland and in Europe, and therefore considers the argument of the supposed negative evolution of European markets to legitimize this decision to be unjustifiable,” adds the FAA.

The organization demands “respect for producers” and points out that we are living in a context “in which meat production appears to be an easier, cheaper, and more profitable alternative.”

In Diário Insular, José Lourenço-director.

Translated into English as a community outreach program by the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL), in collaboration with Bruma Publication and ADMA (Azores-Diaspora Media Alliance) at California State University, Fresno. PBBI thanks Luso Financial for sponsoring NOVIDADES.