The global dairy sector is likely to experience “long lasting impacts” from the ongoing conflict in the Middle East according to new analysis.
The escalation in the conflict, involving the United States, Iran and Israel, is severely impacting on trade routes, energy prices, and supply chains.
The increase in fuel and fertiliser prices throughout the world and the knock on effect on farm margins and farmers has been well documented at this stage.
But according to the UK’s Agricultural and Horticultural Development Board (AHDB) there is one other significant issue facing the global dairy sector and that is centred around the “excess production of dairy products”.
The global growth in milk production in 2025 which continued into 2026 and was also clearly evident in Ireland, poses another challenge when it comes to demand and supply.
“Markets could be under further pressure with softening demand being unable to absorb the excess stocks,” AHDB has outlined.
Its latest analysis shows that milk deliveries in the EU alone averaged 399.7 million litres per day in February, an increase of 20.6 million litres per day – compared to the same month last year, and the strongest February on record.
The big question is if current levels of production continue how will this in turn impact on prices?
Dairy is a major staple in Middle East diets and while Iran is largely self-sufficient other countries such as the United Arab Emirates (UAE), Kuwait, Oman and Bahrain rely heavily on dairy imports.
According to OECD-FAO trade data, the Middle East accounts for around 15-18% of global dairy imports.
AHDB said that the Middle East dairy market size was estimated in 2025 at $19.5 billion with imports comprised mainly of milk powders and functional dairy ingredients.
The top three imports included milk powders, butter and cheese.
In this context the Middle East overall, according to Bord Bia remains a “strategically important market” for Irish food and drink exports.
It is estimated to be valued in the region of €370 million – which represents an 11% year-on-year growth in 2025.
Bord Bia has confirmed that dairy products continue to dominate Irish exports to the region and account for approximately 85% of total export value.
But specifically for Irish exporters, one of the key business impacts of the Middle East conflict is in relation to fresh and time-sensitive food categories.
Middle East
The ongoing conflict and the closure of the Strait of Hormuz, according to AHDB, also makes dairy exports to other regions in the Middle East such as Iraq, Kuwait, Bahrain, Qatar, the UAE and Saudi Arabia east more difficult.
AHDB analysts are now warning that global demand for dairy is like to “remain subdued given the current geopolitical scenario with consumers reeling under inflationary pressure”.
“If the war lasts longer, it could have wide-reaching impacts outside of the Middle East in terms of global consumer demand,” they have forecast.