UK Dairy Farmers Face Crushing Financial Reality as Prices Plummet
Every morning, dairy farmer Paul Tompkins wakes up knowing he'll lose £1,800 just by getting out of bed. For him and his fellow farmers, this is a harsh reality due to plummeting milk prices.
Tompkins' 234-hectare farm in the Vale of York produces around 40p per litre from its 500-strong herd of Holstein cows. However, he's being paid just 29p a litre by his processor, leaving him with significant losses despite running his business as efficiently as possible. This isn't an isolated incident; margins have always been tight in the industry, which has relied on supermarkets to attract customers with low milk prices.
Major supermarkets like Tesco and Sainsbury's charge £1.65 for four pints, equivalent to 41p a pint or 73p a litre. The UK processing industry is dominated by Arla, Müller, and First Milk. Tompkins' cost of production matches the national average, highlighting that he can't avoid the issue.
Dairy farmers are sharing information about their operations to benchmark themselves against other businesses. However, even with this effort, they face significant financial challenges. If farmgate milk prices remain at current levels, Tompkins estimates a loss of at least £660,000 for his farm this year. This decline is attributed to global oversupply of milk, which outstrips demand.
Industry experts blame the situation on American production surging and New Zealand maintaining its market share, while China's consumption isn't increasing enough to offset the surplus. More than 7% extra milk was produced by British farmers in the final three months of 2025 compared to the five-year average, with some attributing this excess to dry spring conditions and drought affecting grass availability.
The processing industry struggled to cope with the quantity of milk, resulting in some producers throwing away milk due to lack of space. This situation worsened in recent months, leading many farmers to question their decision to stay in the industry.
Some farmers have benefited from higher wholesale prices in the past, but now they face significant financial pressures. Around 20% of British dairy farmers quit since October 2019, reducing numbers from 8,720 to 7,010 over six years. The volume of milk produced remains steady due to consolidation and larger herds working to become more efficient.
Experts warn that the current milk price shock will lead to many more calling it quits. Houghton predicts around 10% of dairy producers – or 700 farmers – might leave the industry for good, citing factors like lack of successors, need for reinvesting in resources, and unprofitable operations at current prices.
The question remains whether falling wholesale prices will be reflected in consumers' shopping baskets. The average time lag for lower prices to affect consumers is around seven months, according to the AHDB. Retail prices for butter are expected to decrease in April, with the biggest drops coming from June, and cheddar price reductions starting in July.
Retailers like Morrisons have already reduced some milk and dairy product prices. However, coffee lovers won't enjoy lower prices anytime soon as a significant cost component is still high. Allegra Group's CEO, Jeffrey Young, notes that while supermarkets might reduce their own price increases, it's unlikely they'll pass these savings on to consumers due to rising rent, people costs, and minimum wage.
The situation highlights the vulnerability of dairy farmers in the face of market volatility, making it crucial for policymakers to provide support and reassurance to this vital sector.
Every morning, dairy farmer Paul Tompkins wakes up knowing he'll lose £1,800 just by getting out of bed. For him and his fellow farmers, this is a harsh reality due to plummeting milk prices.
Tompkins' 234-hectare farm in the Vale of York produces around 40p per litre from its 500-strong herd of Holstein cows. However, he's being paid just 29p a litre by his processor, leaving him with significant losses despite running his business as efficiently as possible. This isn't an isolated incident; margins have always been tight in the industry, which has relied on supermarkets to attract customers with low milk prices.
Major supermarkets like Tesco and Sainsbury's charge £1.65 for four pints, equivalent to 41p a pint or 73p a litre. The UK processing industry is dominated by Arla, Müller, and First Milk. Tompkins' cost of production matches the national average, highlighting that he can't avoid the issue.
Dairy farmers are sharing information about their operations to benchmark themselves against other businesses. However, even with this effort, they face significant financial challenges. If farmgate milk prices remain at current levels, Tompkins estimates a loss of at least £660,000 for his farm this year. This decline is attributed to global oversupply of milk, which outstrips demand.
Industry experts blame the situation on American production surging and New Zealand maintaining its market share, while China's consumption isn't increasing enough to offset the surplus. More than 7% extra milk was produced by British farmers in the final three months of 2025 compared to the five-year average, with some attributing this excess to dry spring conditions and drought affecting grass availability.
The processing industry struggled to cope with the quantity of milk, resulting in some producers throwing away milk due to lack of space. This situation worsened in recent months, leading many farmers to question their decision to stay in the industry.
Some farmers have benefited from higher wholesale prices in the past, but now they face significant financial pressures. Around 20% of British dairy farmers quit since October 2019, reducing numbers from 8,720 to 7,010 over six years. The volume of milk produced remains steady due to consolidation and larger herds working to become more efficient.
Experts warn that the current milk price shock will lead to many more calling it quits. Houghton predicts around 10% of dairy producers – or 700 farmers – might leave the industry for good, citing factors like lack of successors, need for reinvesting in resources, and unprofitable operations at current prices.
The question remains whether falling wholesale prices will be reflected in consumers' shopping baskets. The average time lag for lower prices to affect consumers is around seven months, according to the AHDB. Retail prices for butter are expected to decrease in April, with the biggest drops coming from June, and cheddar price reductions starting in July.
Retailers like Morrisons have already reduced some milk and dairy product prices. However, coffee lovers won't enjoy lower prices anytime soon as a significant cost component is still high. Allegra Group's CEO, Jeffrey Young, notes that while supermarkets might reduce their own price increases, it's unlikely they'll pass these savings on to consumers due to rising rent, people costs, and minimum wage.
The situation highlights the vulnerability of dairy farmers in the face of market volatility, making it crucial for policymakers to provide support and reassurance to this vital sector.
... i mean, can you imagine having to make ends meet like that? dairy farming's always been tough, but this global oversupply thing? ouch 
it's like they're just throwing money out the window. arla, Müller, and first milk are basically just sitting on a pile of milk with no idea what to do with it all 
they're making all this profit off our hard work while the farmers are barely scraping by. it's like, can we please just get a fair price for our products? or better yet, support local dairy farms who actually care about their community 
like what r we even doin here? the uk dairy farmers are facin a major crisis and it's not lookin good for them 
. they're losin money hand over fist due to low milk prices and it's not like they can control it, it's all about global oversupply and demand 
. i mean u gotta feel for the farmers who've been in this industry 4 years but now they're thinkin of qitin 
. 700 farmers might leave the industry for good? that's crazy talk 
. policymakers need to step in here and give 'em some support, or we'll be losin another vital part of our food system 
.
dairy farming is hard work & not just about producing milk, its also about running a business with lots of overheads. need some serious support from gov & supermarkets ASAP 
they're not getting paid enough 
farmers are already struggling with dry springs & droughts, now they can't even make ends meet 
we need to help them out more ASAP 
.
. dairy farming is a vital industry, and we need some help navigating these crazy market fluctuations 
I'm not surprised many of them have already quit since 2019.
It's unlikely, considering rising costs for retailers like Allegra Group. We need to make sure dairy farmers get some relief from the situation.