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• Market liberalization and price volatility drive changes in all farming systems. • Price volatility results in poor adaptive capacity of dairy farms. • Strategies for dairy farming systems are conditioned by strategies of processors. • Systems respond with different strategies despite comparable regulatory framework. • Dairy market trends may have long-term impact on land use. For more than two decades market conditions for European producers have changed significantly due to liberalization and increasing price volatility. The objective of this article is to analyze how farming systems in five European countries (Denmark, Greece, France, Latvia, and the United Kingdom) have reacted to the emerging instability of the milk market. Dairy production is an ideal setting to study how different farming systems respond to changing conditions as a number of policy changes have altered market conditions for producers. Empirically, the analysis draws on statistical data on dairy production and farm structure, and qualitative and quantitative data from case studies in the five countries. During the period under study, dairy farming systems have operated under the same overarching EU regulation, but dairy sectors at the national level followed specific pathways. We found different strategies and institutional arrangements deployed to address price volatility at the national levels. We argue that divergence in the strategies developed to address this disturbance reflects different configurations of value chain organization (particularly dairies), production factors (production facilities and biophysical conditions), and market orientation. Increasing market volatility implies that succession planning and attracting investments is difficult for farming systems across all countries, and thereby to formulate strategies for resilience. [ABSTRACT FROM AUTHOR]