March 24, 2026

EU FTA - worse than a missed opportunity

Dairy sidelined in EU trade deal: SADA

The South Australian Dairyfarmers’ Association (SADA) has expressed strong concern and disappointment at the outcomes of the newly concluded Australia–European Union Free Trade Agreement, warning that it fails to deliver meaningful benefits for Australian dairy farmers.

SADA President Robert Brokenshire said the agreement, while framed as a step forward for trade diversification, falls well short of expectations for the dairy sector.

“After nearly a decade of negotiations, Australian dairy farmers were entitled to expect real market access into Europe — not token improvements dressed up as a breakthrough,” Mr Brokenshire said.

While the agreement removes tariffs on a large proportion of EU dairy tariff lines over time, SADA notes that access into the European market remains tightly constrained by quotas and entrenched subsidy settings.

“The reality is that this deal does not materially shift the dial for dairy. The quota volumes on offer are modest, and Australian producers will still be competing against heavily subsidised European production,” he said.

Mr Brokenshire said the outcome reflects a broader concern across Australian agriculture that the agreement does not deliver commercially meaningful gains.

“Free trade must be fair trade. What we are seeing here is an imbalance — with Australian producers opening their market further, while continuing to face significant barriers into Europe.”

SADA also raised concerns about the long-term implications of geographical indication (GI) provisions, which may constrain future product naming and market development.

“While some protections have been secured, these arrangements risk limiting flexibility for Australian dairy businesses over time.”

SADA has today written to Minister Farrell requesting information on how the Australian Government will support the dairy sector to realise any potential benefits from the agreement and to rebuild confidence across agriculture.

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Australia–EU Free Trade Agreement (FTA)

Overview and status

Negotiations on the Australia–European Union Free Trade Agreement concluded on 24 March 2026 after approximately eight years with a Joint Statement signed by leaders.
The Australian Government has stated that the agreement is in the national interest, as it supports trade diversification, improves market access, strengthens bilateral relations, and reinforces rules-based trade.
The Government has indicated that it considers the outcome to be balanced and has expressed confidence that no further concessions were available.
Entry into force of the agreement is expected to take 18 months to two years.

Market access outcomes

Australia’s access to the European Union

The EU will eliminate tariffs on 87.3 per cent of dairy tariff lines.
- Tariffs on a range of Australian dairy exports to the European Union will be eliminated over three years, including cheese (up to €2,212/t), yoghurt (up to 8.3% plus specific duties), dairy spreads and fats (up to €2,313/t), whole milk powder (up to €1,672/t), and buttermilk and curdled products, with tariffs on ice cream eliminated immediately upon entry into force.
Tariffs on Australian cheese exports to the European Union will be eliminated over three years, through four equal reductions.
Some limited day-one access will be available for cheddar and processing cheese through adjustments to existing World Trade Organization quotas.
The European Union will provide tariff-rate quotas for key dairy products, including 5,000 tonnes of natural butter, 8,000 tonnes of skim milk powder, and 2,000 tonnes of high protein whey.
- Out of quota tariffs remain prohibitively high (~€1,900/tonne for butter, ~€1,250/tonne for skim milk powder and ~€1,350/tonne for high protein whey)
Overall, Australia’s access to the European Union dairy market will still remain constrained by quotas and is considered less favourable than the access provided by the European Union to competitors such as Canada and New Zealand.

European Union access into Australia

Australia will eliminate the existing tariff on cheese imports (currently $1.22/kg) over three years, while the existing WTO global cheese quota of 11,500 tonnes will remain in place.

Geographical Indications (GIs)

Australia will protect 396 geographical indications (GIs) requested by the European Union, which will require the establishment of a new domestic geographical indications framework.
- This includes 56 dairy GIs.
The Department of Foreign Affairs and Trade (DFAT) will work with IP Australia to implement this new system.
Australian producers will retain full and unrestricted use of the term “parmesan”, but the term Parmigiano Reggiano will be a protected GI.
The right to the use the terms “feta” and “gruyere” will be grandfathered, allowing existing users to be able to continue using the term, but restricting any future users of the term.
The term “romano” will be grandfathered for existing users for wholesale use, but will be restricted at retail level.
The terms “fontina” and “munster” will be phased-out following a transition period of 5 years after entry into force of the A-EU FTA.
The term “neufchatel” has been removed from the geographical indications list and therefore is unaffected.
To be eligible for grandfathering rights, businesses will need to demonstrate at least five years of continuous use prior to the agreement entering into force.
Geographical indication protection applies to product names and does not restrict the physical production of products within Australia.
Businesses that are not covered by exemptions may be required to adopt alternative naming conventions.
DFAT has indicated that a consumer education program will form part of the implementation of the new system.

Safeguards and review mechanisms

The agreement includes a transitional safeguard mechanism that will apply for a period of seven years.
This safeguard can be triggered if import surges cause serious injury to domestic industry.
The mechanism allows the Government to pause tariff reductions or revert tariffs to pre-agreement levels where necessary.
The agreement includes a general review clause; however, there is no dairy-specific review mechanism.

Background

Operating environment

The agreement is being considered in the context of a materially weakened operating environment for the Australian dairy industry.
Over the past two years, dairy businesses have experienced prolonged drought in southern regions and flooding in northern regions.
Businesses are also facing rising input costs, increasing compliance burdens, and growing concentration in the supermarket sector.
Approximately one in four dairy products consumed in Australia is now imported.
At the same time, domestic processors are facing rising energy, labour, and regulatory costs, which are reducing their capacity to absorb further competitive pressure.
The operating environment is further compounded by uncertainty associated with the ongoing Middle East conflict, which is driving increased volatility and upward pressure on fuel, fertiliser and freight costs.

Growth in European Union imports

Imports of dairy products from the European Union have increased by approximately 33 per cent in value over the past five years.
Cheese has been the primary driver of this growth, with import values increasing by approximately 60 per cent over the same period.
In 2025, the European Union overtook New Zealand as Australia’s largest source of cheese imports by value, with imports worth $494 million.
Total dairy imports from the European Union were valued at over $980 million in 2025, compared to Australian exports to the European Union of just $29 million.
In volume terms, Australia imported almost 77,000 tonnes of dairy products from the European Union in 2025, while exporting only 134 tonnes to the European market.

Existing tariff protections

The European Union is currently the principal user of Australia’s 11,500-tonne World Trade Organization cheese quota.
Imports above this quota are subject to a tariff of $1.22 per kilogram, which represents one of the last remaining meaningful trade protections applying to dairy imports.

Competitive dynamics

Semi-hard cheeses, such as gouda, represent the largest and fastest-growing import category and are expected to be most affected by tariff removal.
In 2025, imports of semi-hard cheeses reached 11,248 tonnes and were valued at $170 million.
These products have faced an effective ad valorem tariff of between 8 and 11 per cent in recent years.
Semi-hard cheeses compete directly with domestic products across retail, food service, and ingredient channels, meaning tariff removal will primarily benefit products in high-volume segments.
The European Union produces approximately 160 billion litres of milk annually, which is around 19 times Australia’s production.
In 2023, the average dairy farm in the European Union received €22,978 in subsidies (excluding investment support), representing approximately 31 per cent of average Farm Net Value Added (€73,326).
The European Union’s Common Agricultural Policy provides extensive income and structural support to dairy producers.
In total, EU dairy farms received approximately €10.7 billion in operating subsidies in 2023, including €5.5 billion in decoupled payments.
Evidence from the Dairy Companies Association of New Zealand Global Dairy Distortions Model indicates that even WTO-permitted “non-trade distorting” decoupled payments can influence production decisions and alter trade flows.
More broadly, the European Union provides approximately €60 billion in direct agricultural support each year, creating a significant competitive imbalance for Australian producers.

Frequently Asked Questions

Is this a good deal for the Australian dairy industry?

The agreement delivers some improved access into the European Union, particularly through tariff reductions. However, Australia’s access into the EU still remains constrained by quotas, while Australia will fully liberalise its dairy market. This creates an imbalance, particularly given the scale and level of support provided to European producers.

Relevant facts

Total dairy imports from the European Union were valued at over $980 million in 2025, compared to Australian exports to the European Union of just $29 million.
In 2023, the average dairy farm in the European Union received €22,978 in subsidies (excluding investment support), representing approximately 31 per cent of average Farm Net Value Added (€73,326).

Why is the dairy industry concerned about this agreement?

The key concern is the lack of reciprocity, with Australia providing full market access while EU access remains quota-limited. The agreement also removes one of the last remaining tariff protections on cheese, which is a core domestic manufacturing category. This is occurring at a time when the industry is already facing significant cost pressures and increased import competition.

Relevant facts

The European Union will provide tariff-rate quotas for key dairy products, including 5,000 tonnes of natural butter, 8,000 tonnes of skim milk powder, and 2,000 tonnes of high protein whey.

What does this mean for Australian dairy farmers?

Increased import competition could place downward pressure on domestic prices over time. This may flow through to farmgate milk prices, particularly if domestic processing margins are squeezed. The impact will depend on how quickly imports increase and how processors respond.

Will Australian jobs be affected?

The Australian dairy industry directly employs almost 31,300 people across farming and processing. Dairy processing, particularly cheese manufacturing, underpins regional employment and investment. Increased imports in high-volume categories could reduce domestic production and place pressure on manufacturing jobs over time. The extent of the impact will depend on the scale of import growth and investment responses.

How significant are EU dairy imports already?

EU dairy imports into Australia have grown strongly in recent years and now exceed $980 million annually. The EU is now Australia’s largest source of cheese imports by value, worth $494 million. Australia imports significantly more dairy from the EU than it exports to the EU.

Relevant facts

Total dairy imports from the European Union were valued at over $980 million in 2025, compared to Australian exports to the European Union of just $29 million.
In volume terms, Australia imported almost 77,000 tonnes of dairy products from the European Union in 2025, while exporting only 134 tonnes to the European market.

How does EU support for farmers compare to Australia?

The European Union provides substantial support to its agricultural sector, including dairy. In 2023, the average EU dairy farm received €22,978 in subsidies, which accounted for approximately 31 per cent of farm net value added. In total, EU dairy farms received around €10.7 billion in operating subsidies, including €5.5 billion in decoupled payments. This level of support creates a significant competitive imbalance when combined with full market access into Australia.

What are geographical indications and why do they matter?

Geographical indications are protected product names, such as feta or gruyere. Under the agreement, Australia will protect a large number of EU GI names, which may limit how some products are labelled domestically. While existing users of some terms will have their rights grandfathered, others may need to rebrand, creating compliance and transition costs. This may also create confusion for consumers, who may be unfamiliar with new or alternative product names (for example, products previously labelled as feta being sold under more generic terms such as “white cheese”).

Why is timing a concern?

The agreement is being considered at a time when the industry is already under pressure from rising costs, climate impacts, and increasing imports. Additional uncertainty from global geopolitical tensions is also contributing to higher fuel, fertiliser, and freight costs. Competitiveness is not determined by one policy in isolation, but by the combined impact of trade settings, regulation, energy, and global cost pressures.

What is the industry asking for?

The Australian Dairy Industry Council (ADIC) has stated that the agreement does not deliver fair and reciprocal outcomes for Australian dairy and increases exposure to subsidised European imports without equivalent access to the EU market. The industry is calling on the Australian Government to implement targeted support measures, including a dedicated “Buy Australian dairy” campaign to strengthen domestic demand. More broadly, the industry has emphasised that trade policy and domestic regulatory settings must be aligned to support local production, investment, and regional jobs.

Is “no deal better than a bad deal” still the industry position?

ADIC has consistently maintained that outcomes should deliver fair and reciprocal access and support long-term competitiveness. Their view is that the final agreement does not materially improve on what was proposed in 2023 when the Government walked away from the deal.