Raw Milk Production Costs Ease in July: Feed Dynamics Drive Marginal Decline

The Turkish Dairy, Meat, and Dairy Products Industrialists and Producers Association (TÜSEDAD) released the raw milk production cost data for July 2026, defining the direction of a key indicator on the supply side of food inflation. According to the association's data, there was a limited relaxation in the basic input costs of milk producers on a monthly basis, and the cost per liter showed a downward trend.

Alfalfa Price Retreat Curbs Production Expenses

The primary driver behind this slight decline in production costs was recorded as the sharp drop in prices for alfalfa, a critical input in animal husbandry. TÜSEDAD data reveals that the cost of a liter of hot raw milk, which was 26.97 TL in June, decreased by 0.37% in July to 26.87 TL. The downward movement in prices was the determining factor in this decline.

■June cost per liter: 26.97 TL

■July cost per liter: 26.87 TL

■Monthly cost change: 0.37% decrease

■Decline in alfalfa prices: 6%

Balancing Act: Feed Costs and Slaughter Revenues

Counterbalancing factors limiting the improvement in costs appeared in the revenue items of the enterprises. According to the statement from the association, while the 6% retreat in alfalfa prices reduced the cost per liter by approximately 10 kuruş, the stagnation in other input items and the loss on the revenue side prevented the full reflection of this advantage. While no significant change was observed in concentrated feed prices, the 3% decline in reforme animal slaughter prices limited enterprise revenues to a modest extent, partially balancing the advantage from feed expenses.

The alleviation of cost-driven pressures in the food group, which carries significant weight in the Consumer Price Index (CPI), sends a critical signal regarding the persistence of inflation. While the 6% retreat in alfalfa prices pulls producer costs down, the overall picture shows the dairy sector exhibiting marginal improvement. However, the limited nature of this decline suggests that structural issues in food inflation are not fully resolved. We are in a period where the Central Bank needs to closely monitor food inflation.