Dairy producers across the UK are under strain after sharp price cuts following a downturn in global dairy markets. Farmgate milk prices now range between 35p and 45p per litre, though autumn seasonality payments have softened the blow for some.
Consultants report that farmers on manufacturing milk contracts are the worst affected, while those supplying retail-linked contracts remain comparatively stable. Rising milk output continues to outpace demand, with GB deliveries up 7% in early October from a year earlier.
Diarmaid Mac Colgáin, founder of Concept Dairy, said previous high prices encouraged overproduction, leading to market oversupply and a collapse in butter prices across Europe. The result has been weaker farmgate returns and falling wholesale values, with the Global Dairy Trade auction on 7 October reporting another 1.6% decline across key products.
According to Nick Holt-Martyn of The Dairy Group, milk supply in major exporting nations is “well in excess of demand”, driving down markets and squeezing margins. The group forecasts a production cost of 49.2p/litre for 2025–26, meaning prices below 40p/litre could make operations unsustainable.
Experts urge producers to focus on cost control, forage quality, and feed efficiency to survive the downturn. Unless production costs fall, 2026 could be one of the most challenging years yet for UK dairy farmers.
