Among the food sectors in the European Union, dairy is without doubt the most prominent one. Together with primary production and processing, trading plays an important role in the dairy chain. Dairy trade is indispensable for ensuring that dairy products are available at the market place under the right conditions. This process starts right after the production of raw milk when milk is already traded to reach the best processing destination. In the EU, where the raw milk production amounts to 147 million tons, about 130 million tons of raw milk are processed into a variety of products. The most important outlets are cheese, liquid milk products, milk powders and butter. These products can be destined for direct consumption but dairy products are increasingly used as ingredients in numerous other products.

Dairy trade is primarily taking place on the huge internal EU market but, depending on the product, exports are also important. For example, 55% of EU milk is used for cheese making equalling a production of 9 million tons while exports amount only to 600 000 tons which equals 6%. For Full Cream Milk Powder, EU production is about 800 000 tons some 500 000 t (63%)  of which are exported. Trade has a key function within the internal market, but also for exports and imports. Imports of dairy products are mostly the result of bilateral trade agreements between the EU and third countries whereby a specific volume can be imported against a reduced levy.