Arla Foods, one of the UK's three major processors (alongside Müller and First Milk), also cut prices
The situation for UK dairy farmers is worsening significantly. Major milk processors recently cut the prices paid for raw milk. Ian Harvey expressed deep concern. He noted milk leaves farms at a loss. Sector confidence is extremely low.
Before these recent cuts, most British producers struggled. Milk purchase prices were below real production costs. This pressure grew throughout the year. Volatile farmgate prices played a role. Severe summer drought also impacted yields. Essential costs like fuel and fertilizer rose sharply due to the Iran conflict.
The major shock came from large dairy processing companies. Freshways, a giant supplying bottled milk to stores and cafes, announced a significant tariff reduction. Starting December 1, the price per litre drops by 7 pence to 29.4 pence. The company cited weak dairy markets. Liquid milk yields created financial strain. This cut nearly cancelled a 9 pence per litre increase Freshways had previously implemented. Bali Nijjar, Freshways CEO, noted expected market improvements did not materialize while company costs rose.
Arla Foods, one of the UK's three major processors (alongside Müller and First Milk), also cut prices. They reduced standard milk by 0.45 pence per litre starting in November, setting it at 40.41 pence. Organic milk price remained unchanged at 58.25 pence per litre.
Globally, the dairy cooperative sees stable high supply. Whey protein market saw a slight dip from peaks. This trend is fueled by increased popularity of whey supplements. This is linked to GLP-1 weight-loss medication use and consumer protein demand.
Chris Walkland, a dairy market analyst, noted Freshways' cut occurred while others maintained existing tariffs
Arla's price reduction aligns with usual sector movements. Milk is an international commodity. Farmers expect market volatility. However, Freshways' adjustment magnitude surprised analysts and producers. The NFU called this „extremely disappointing.”Harvey added, „It has deeply affected us. Rebalancing may come later, but such a large price adjustment, not spread over two or three months, is a major difficulty for farmers.” Harvey manages a family farm in North Cornwall. It raises 160 Holstein-Friesian and Ayrshires. Though not directly affected by these cuts, his NFU council presidency requires him to represent struggling producers.
Chris Walkland, a dairy market analyst, noted Freshways' cut occurred while others maintained existing tariffs. Walkland stated Freshways is „extremely competitive,”especially with high milk volumes. He suggests looking back to August 2025 for deeper understanding.
Last autumn was positive for UK and European milk production, causing global oversupply. Milk volume did not drop severely during the summer drought. Farmers supplemented animal feed when grass growth ceased, maintaining production levels.
Farmers have limited control over processor selection or rates. Major UK supermarkets like Tesco and Sainsbury’s committed to paying based on production costs. Other producers are in cooperatives, which are not universally accessible.
Dairy profit margins are always narrow. Supermarkets traditionally used low milk prices for customer attraction. Recently, Tesco, Sainsbury’s, Morrisons, and Asda raised the four-pint milk pack by 10 pence to £1.75. This is under 44 pence per pint or 77 pence per litre. Walkland stressed, „Farmers have little or no mobility between processors,”a fact unchanged recently. Few processors recruit new farmers, and only in small numbers.