Overcapacity meat and dairy due to livestock herd reduction

The 15 to 18 percent decline in the Dutch livestock herd is having a significant impact on the dairy and meat sectors. With fewer animals, the supply of milk and meat has dropped, creating overcapacity at businesses operating close to the farm.

This is particularly evident at slaughterhouses and dairy processors. Their systems are designed for higher volumes, resulting in underused facilities and lower occupancy rates. Companies further down the chain, including processors and traders, are also affected—though they tend to have more flexibility to adapt.

Falling supply pushes prices up

Lower supply is driving prices up. That’s beneficial for many of the remaining farmers, who are seeing their income rise despite global competition. At the same time, companies that buy directly from farms face higher purchasing costs. These are often only partly passed on to consumers, putting pressure on margins.

Besides the impact of rising prices, the loss of scale advantages plays a role. Businesses that don’t adjust their production capacity in time risk a sharp drop in efficiency and profitability.

Still, the situation is creating new opportunities. The shift from volume to value is pushing companies to reassess their market position. Those focusing on products with higher added value—for instance by blending animal and plant-based proteins—can build a distinctive offering. Closer cooperation across the chain is also becoming more important. Building stronger ties with farmers or setting up alternative supply channels, such as imports, can help companies manage fluctuations in availability more effectively.

Time for repositioning and sustainable strategies

The reduction in livestock is not only an economic challenge but also opens the door to more sustainable practices. Fewer animals means lower environmental pressure. Companies can use this transition to adjust their operations and move toward more sustainable production. That requires investment—but also clear vision and a long-term approach.

Businesses that take action now will be better positioned to stay competitive. Those that delay risk long-term losses. The effects of a shrinking livestock herd go beyond primary agriculture—they reach across the entire food industry.

The report ‘Krimp veestapel creëert overcapaciteit bij foodindustrie’ outlines these developments, impacts, and strategic responses in detail. The full report offers further insights and practical recommendations.