UK farmgate milk prices are set to fall below 40p/litre before the end of the year, as processors impose fresh price cuts to offset collapsing wholesale returns and persistent oversupply.
Falling UK and European wholesale values for butter, cheese, and cream have driven the downturn, with spot milk prices now quoted below 20p/litre. Ample global supplies and GB milk deliveries, which remain more than 6% higher than last year, have further pressured the market, leaving producers bracing for a bleak winter.
Industry sources warn that milk prices are likely to remain subdued into early 2026 unless production tightens significantly.
Processors Slash Farmgate Prices
First Milk will cut its standard manufacturing litre by 6p/litre in December, bringing the price to 35.85p/litre (including its member premium). Vice-chairman Mike Smith said the move was “very disappointing but necessary” due to the continued imbalance between supply and demand.
Arla has reduced its conventional manufacturing price by 2.63p/litre for November to 42.71p/litre, equating to a liquid price of 40.95p/litre. The co-operative cautioned that negative market momentum is likely to persist.
Muller will pay 40p/litre for a standard liquid litre in December, a 1.5p/litre reduction. The processor recently rolled out amended contracts for producers supplying its Skelmersdale site, offering revised pricing structures under the Muller Direct and ingredients models.
Barbers Cheesemakers suppliers will see prices fall by 3.87p/litre to 38.64p/litre, while Freshways will reduce its December price by 2p/litre to 34p/litre, citing “immense pressure” from oversupply and falling returns.
Freshways managing director Bali Nijjar noted that cream prices have dropped to £1,750, down from £1,986 in September, with spot milk prices at their lowest seasonal level on record.
With commodity values weakening and supply outstripping demand, the sector faces a challenging start to 2026. Analysts suggest that without a significant correction in milk output or renewed demand from export markets, the recovery in farmgate prices may not begin until the second half of next year.