According to MarketScreener, the sharp fall in milk purchase prices in the UK is pushing farmers to the brink of operating at a loss. Due to oversupply, many producers are already operating at a loss and are warning of the risk of a mass exodus from the industry.

Prices have fallen by 40%

According to market data, since October 2025, the prices that processors pay to farmers have fallen by around 15 pence per litre, or approximately 40%.

Farmer Kelly Seaton, who runs a herd of 200 cows with her husband in north-west England, notes: “It’s simply a matter of there being a surplus of milk on the market”.

According to her, the production cost is around 40 pence per litre, whilst the purchase price is only 30.5 pence, which makes production unprofitable.

“We’re definitely going to make a loss this year,” says Seaton.

A milk surplus is causing the market to collapse

The main reason for the fall in prices is a sharp rise in milk production worldwide and in the UK.

Although the country’s cow herd has fallen to 1.6 million—a decade-low—productivity has risen. This has led to supply exceeding demand and processing capacity.

“We are price takers, not price makers — we have no choice,” says Kelly Seaton.

Farmers are suffering massive losses

The situation is similar in other regions. Farmers are reporting a sharp deterioration in their financial situation.

Thomas Gwyndaf, who keeps 300 cows in Wales, emphasises: ‘We have never seen such a sharp fall in prices in such a short space of time.’

Paul Tompkins, a farmer from the north of England, expects to lose up to £600,000 this year, despite having made a profit in previous years.

“The challenge for the sector is how to manage increasing price volatility in the future,” says the farmer

The industry is shrinking

According to industry organisations, the number of dairy farmers in the UK has fallen by 20% since 2019 and now stands at around 7,000 farms.

This poses risks to food security, as the dairy sector accounts for around 20% of the country’s agricultural output and generates over £6 billion annually.

Costs are rising, prices are falling

Additional pressure on farmers is being exerted by:

  • rising energy and fuel prices;
  • rising costs of feed and fertilisers;
  • tax burden.

The sector is also affected by global factors, particularly geopolitical conflicts.

Demand for milk is set to rise

Despite the crisis, the long-term outlook remains positive. Global demand for dairy products is expected to grow.

According to forecasts, per capita consumption of dairy products is set to rise by 11% by 2033.

However, experts warn that unless profitability improves, the industry could lose a significant number of producers.

“Ultimately, this means fewer farmers and greater market concentration,” notes agricultural consultant Paddy Snodgrass.

Despite the difficult situation, farmers remain cautiously optimistic:

“We’ll just have to get through these tough times and hope that the good times make up for the bad,” says Kelly Seaton. 

Source: MarketScreener