Portugal is not exactly known for its milk production – yet milk is produced intensively there. And this despite the fact that conditions are not particularly good, with lots of sun, little rain and a shortage of land. Portugal's dairy farmers compensate for this shortcoming with complex production methods.
Portugal is more commonly associated with sun, beaches and sea than with intensive milk production. However, this year's annual conference of the European Dairy Farmers (EDF) in Póvoa de Varzim, near the city of Porto, gave the more than 350 participants a different impression of the country. This is because milk is produced in modern, well-equipped farms, especially in the north. This is also where the country's milk production is concentrated. Farmers benefit from the mild Atlantic climate and an 11-month growing season. In the south, the soil is poorer and water shortages are more severe. That is why fewer cows are kept there.
Last year, there were a total of 220,000 dairy cows and 3,700 milk producers in Portugal, most of which are kept on small and medium-sized family farms. The average herd size is 60 cows per farm, with an average milk yield of 8,840 kg per cow per year, and the trend is rising. Between 2015 and 2024, milk production increased by almost 70%. In the centre of the country, herds tend to be larger, with some having up to several hundred cows. Another key region for Portuguese milk production is the Azores archipelago, with its temperate oceanic climate, year-round temperatures of 15 to 25ºC and sufficient rainfall. The two main islands of São Miguel and Terceira are home to 33% of Portugal's dairy cows. In contrast to northern Portugal, where almost all cows are kept in stables all year round, feeding in the Azores is mainly pasture-based.
Milk ingredients are still secondary
The milk price is slightly below the European average in most months. The low nutrient content of Portuguese milk is striking. The explanation for this is that milk processors have not yet rewarded fat and protein content, as most of the milk produced is for drinking. The standard is 3.7% fat and 3.2% protein content. Milk producers therefore do not place any value on higher milk content when designing rations and selecting insemination bulls. However, there is currently a trend towards focusing more on milk content.
Land is used intensively
Many dairy farms want to grow in order to be more sustainable. The biggest obstacle to this is not only the price of land, but rather the lack of land, especially in the densely populated north. There are simply virtually no fields available on the market, either for lease or for purchase. The fields are mostly rather small and often scattered and further away. Farmers have to buy in a lot of feed. This makes their milk production very vulnerable to price fluctuations on the feed market, especially for protein feed.
However, to balance out the intensively farmed regions, Portugal also has large areas of uncultivated land with high biodiversity. Over half of the country's land area is forest and scrubland that is not used for agriculture.
On average, Portuguese farms have only 1.5 hectares of arable land per 10 LU. Efficient milk production is only possible because farmers use most of their land for at least two purposes. The favourable climatic conditions allow intensive maize cultivation from spring to autumn. During the winter months, grass is then grown on the same land as a catch crop, from which two silage cuts are usually made.
Milk processing and consumption are declining
In 2024, Portuguese milk producers marketed 1.88 million tonnes of raw milk, which corresponds to 1.3% of EU production. 3% of this was organic milk. Most of the milk produced is for drinking, with only the Azores being a major cheese-producing region. The main buyer is the Lactogal dairy, which processes 60% of the raw milk supplied. It was formed in 1996 from the merger of three milk processors and currently has seven locations in Portugal and Spain.
Milk consumption in Portugal was 62.4 kg per capita per year in 2023, which was above the EU average of 52.9 kg per capita per year, but the trend is downward. The situation is different for cheese consumption, where Portugal only reaches 14.9 kg (EU average: 20.7 kg per capita per year).
Portugal's self-sufficiency rate exceeds 100% for milk and butter, but domestic demand for cheese and processed milk products is not met.
Irrigation is essential
Sufficient feed can only be obtained from the fields because the land is irrigated. Irrigation ensures average yields of 23.6 t DM/ha for maize silage and 7.1 t DM/ha for field grass. Irrigation hoses can be seen everywhere between the rows of maize. Many dairy farmers have had good experiences with drip irrigation, which supplies the plants with water and fertiliser in a targeted manner. Most of the water required for agriculture comes from reservoirs that have been built in many parts of the country over the past decades. Most of the water required for agriculture comes from reservoirs that have been built in many parts of the country over the past decades. Water for irrigation can also be taken from rivers and streams. Irrigation must be registered and approved. The amounts of water used must be recorded. So far, however, water extraction is still free of charge. Whether this will remain the case is under discussion.
Manure management
Farmers from other European countries are surprised at the quantities of manure that many Portuguese dairy farmers are allowed to spread on their land. Portugal implements the EU Nitrates Directive 1:1. However, like other EU countries, it has decided not to declare the entire country a control area, but to designate specific Nitrate Vulnerable Zones (NVZ). The restrictions of the Nitrates Directive are implemented accordingly in these zones.
Those who produce large amounts of manure need sufficient storage capacity. Here, too, the lack of land has an impact. Most dairy barns have basements to store the manure. This increases the cost of building the barn, but saves space and money for manure tanks or lagoons. It also means that the population is less bothered by odours. This is also an important argument, as most farms and dairy cattle farms are located in close proximity to neighbours in villages or on the outskirts of towns. Fortunately, however, agriculture still enjoys a high reputation among the population and there are rarely any problems with neighbours.
Livestock housing construction
Participants at the EDF annual conference in Povao de Varzim saw many newly built farms equipped with modern technology. They benefit from moderate construction costs, less stringent distance requirements and high depreciation rates for buildings. The building costs of Portuguese EDF farms average just under €2,600 per cow, machinery costs exceed €1,800 and the capital employed per cow is around €6,830.
Automatic milking systems are becoming increasingly common in northern Portugal, and larger farms use carousel milking. The labour costs for this are not high. Labour costs are usually well below €10/hour. This is one of the reasons why Portugal still manages to rank in the middle of the European production cost comparison, despite the expensive purchase of feed and the considerable costs of home-grown feed.
Premiums and direct payments
As in all other European countries, public payments and investment support help to make farms more competitive. From 2026, they will receive basic payments of €80.70/ha. In addition, there is a redistribution premium of €120 for the first 20 ha cultivated (but only for farms with less than 100 ha).
Dairy farmers also receive a production-linked payment for cattle, milk or feed: e.g. €113 per LU for dairy cows and €120 for growing silage maize as feed. In addition, there is investment support and support for farming in disadvantaged areas, among other things. The investment support has enabled the farms that the participants of the EDF Congress saw to develop in the first place. Young farmers are also supported; for example, they can apply for a start-up payment of €20,000. Portugal has launched various programmes as part of the EU Eco-Schemes. These include, for example, grazing cows, applying organic fertiliser, improving feed efficiency, increasing animal welfare, reducing antibiotics and increasing biodiversity on arable land and grassland.
