Major UK dairy processors are maintaining their December milk prices despite growing pressure from weakening dairy commodity markets, while a significant 7p/litre reduction announced by liquid milk processor Freshways has raised concerns about farmgate returns heading into 2027.
Müller, First Milk and Barber’s Cheesemakers have confirmed that their December milk prices will remain unchanged, offering some stability to dairy farmers amid uncertain market conditions. However, Arla has reduced its conventional milk price by 0.45p/litre for November, reflecting continued pressure across parts of the European dairy market.
The latest developments highlight a mixed market environment, with declining butter and cream prices contrasting with improving skimmed milk powder (SMP) values. The divergence between dairy commodity prices is creating challenges for processors and increasing uncertainty over the sustainability of farmgate milk prices.
Major Processors Maintain December Milk Prices
Several leading dairy buyers have opted to maintain their December milk prices despite weaker market conditions.
Müller suppliers meeting the requirements of its Advantage scheme will receive 37.5p/litre in December. First Milk has retained its standard manufacturing milk price at 39p/litre, including the member premium. Barber’s Cheesemakers has also confirmed a price hold at 40.11p/litre, while its lower-constituent standard litre remains at 39p/litre.
Meanwhile, Arla’s conventional headline milk price for November stands at 40.41p/litre following a reduction of 0.45p/litre. Its organic milk price remains unchanged at 58.25p/litre.
These decisions provide some short-term reassurance to suppliers, although market analysts warn that further price reductions could become necessary if dairy commodity values fail to recover.
| Dairy Processor | Milk Price | Period / Status |
|---|---|---|
| Müller | 37.5p/litre | December hold (Advantage scheme) |
| First Milk | 39p/litre | December hold |
| Barber’s Cheesemakers | 40.11p/litre | December hold |
| Barber’s standard litre | 39p/litre | December hold |
| Arla conventional | 40.41p/litre | November, down 0.45p/litre |
| Arla organic | 58.25p/litre | November, unchanged |
Market analyst Chris Walkland cautioned that further reductions in January could not be ruled out if commodity markets failed to improve. He highlighted particularly weak European butter and cream values as significant concerns for dairy market returns.
Freshways Announces Significant 7p/Litre Reduction
The latest market uncertainty has been intensified by Freshways’ decision to reduce its milk price by 7p/litre from December. The reduction follows a recent 9p/litre autumn price increase, bringing its base price to 29.4p/litre.
Freshways Managing Director Bali Nijjar explained that anticipated improvements in dairy markets had not materialised, particularly in the dairy fat segment. He also pointed to the failure of liquid milk selling prices to increase sufficiently to reflect rising farmgate production costs.
Walkland described the reduction as a particularly difficult development for dairy farmers, especially those already dealing with higher operational expenses. He noted that Freshways’ earlier price increases, including a 3p/litre rise in September and a further 6p/litre increase in October, had left the processor exposed when expected market improvements failed to materialise.
NFU Dairy Board Chairman Ian Harvey also expressed disappointment, warning that substantial and sudden milk price reductions could further weaken confidence across the dairy sector.
He emphasised that dairy farmers require price stability and confidence to plan investments, expand production and manage their businesses effectively.
Falling Butter and Cream Values Weigh on Dairy Markets
Recent commodity price movements indicate continued pressure on dairy fat markets. According to AHDB figures, UK bulk cream averaged £1,528 per tonne in October, representing an 11% decline compared with September. Butter prices also fell by 7% to £3,300 per tonne.
In contrast, skimmed milk powder recorded a 7% increase, reaching £2,930 per tonne during the same period.
| Dairy Commodity | October Average Price | Monthly Change |
|---|---|---|
| Bulk cream | £1,528/tonne | Down 11% |
| Butter | £3,300/tonne | Down 7% |
| Skimmed milk powder | £2,930/tonne | Up 7% |
The contrasting performance of dairy commodities reflects differences in market demand and product utilisation. While weaker butter and cream values are putting pressure on dairy processors’ returns from milk fat, improving SMP prices are providing some support to the milk protein segment.
The Dairy Group’s latest Market Price Equivalent (MPE) also declined by 0.62p/litre in October to 41.16p/litre. Despite the monthly reduction, the figure remained 1.6p/litre higher than the corresponding period last year.
Falling Milk Supply Could Support Market Recovery
Despite weaker commodity prices, developments in milk production could provide some support to the market in the coming months.
Nick Holt-Martyn of The Dairy Group reported that European milk supply had fallen below year-earlier levels for the first time in the reported period, with September volumes down 0.4% compared with September 2025.
UK milk deliveries were also estimated to have declined by 4% year-on-year in October. Reduced milk availability could eventually help rebalance supply and demand, potentially supporting wholesale dairy commodity prices.
However, Michael Masters of Barber’s noted that UK milk volumes remained above the five-year average, contributing to continued pressure on dairy markets.
Farmgate Price Outlook Remains Uncertain Heading Into 2027
The combination of falling dairy fat prices, uneven commodity performance and changing milk supply conditions is creating an uncertain outlook for the UK dairy industry.
Although lower milk production could eventually support commodity market recovery, analysts caution that improvements may take time to translate into stronger farmgate returns.
The coming months will therefore be important for dairy processors and producers as they assess market demand, commodity values and milk availability. Whether butter and cream prices recover sufficiently to support producer payments will be a key factor in determining farmgate milk prices heading into 2027.