United Kingdom Dairy Industry Overview

The United Kingdom is a significant contributor to the global dairy industry, producing approximately 15 billion liters of milk annually. This level of production is supported by a robust dairy cattle population of about 1.8 million, ensuring the UK's strong presence in the international dairy supply chain.

Dairy Processing and Production

The UK boasts advanced dairy processing facilities that produce a diverse array of products. Annually, these facilities deliver 450,000 tonnes of cheese, 150,000 tonnes of milk powder, and 300,000 tonnes of whey. Such extensive production capabilities maintain the UK's competitive edge in the global markets and support its robust export activities.

Key Dairy Enterprises

Prominent companies like Arla Foods and Müller are central to the UK dairy sector. Arla Foods is renowned for its innovative product launches, while Müller enhances the processing capabilities of smaller farms. Long Clawson Dairy is famous for its Stilton cheese, and Millbrook Dairy is noted for its charitable contributions.

Export and Import Dynamics

The UK is a major player in international dairy trade, with exports valued at approximately £1.6 billion annually. However, imports surpass exports, reaching £2.2 billion, driven by high domestic consumption. The European Union remains the primary market for UK dairy exports, with notable growth reported in 2025.

Recent Events and Developments

Recent developments include product launches by Arla and initiatives by Müller to support small farms. The Dairy Roadmap coalition focuses on climate and sustainability goals. Arla Foods plans significant upgrades at its Oswestry plant, while Northern Ireland emphasizes innovation, and Scotland's Rural University and College invests in sustainability research.

Trends and Challenges

Despite challenges such as livestock import restrictions and evolving market demands, increased milk production per farm has led to a 10% rise in milk output year-on-year. The UK faces milk collection issues and a shift towards health-conscious consumer preferences. Ice cream consumption remains robust at about 320 million kilograms annually.

Sustainability Initiatives

Over 50 UK dairy farms have joined the Dairy Carbon Network to reduce emissions and enhance productivity. Arla has introduced its Cultura product line focused on gut health. The UK leads in adopting sexed semen for Holsteins, with an 84% adoption rate. The GB Calf Strategy 2025-2030 was unveiled at UK Dairy Day, marking a significant milestone in dairy farming.

Regional Insights

Dairy farmers in South West England have benefited from higher milk prices and reduced feed costs. Northern Ireland addresses challenges like changing weather conditions and global trade uncertainties. Scotland's Rural College developed the "farm-twin," the world's first "digital twin" for dairy farming.

Regulatory Developments

Recent reductions in milk prices by up to 18% have led UK MPs to advocate for stronger regulation of the dairy industry. In Tyrone, a dairy farm invested £750,000 to transform its operations, increasing milk production by 500,000 liters annually with support from Ulster Bank.

Market Outlook

UK milk prices are projected to fall below 40p per liter by year-end due to declining wholesale values and oversupply. GB milk deliveries remain over 6% higher than the previous year, increasing market pressures. British consumers currently pay more than A$2 per liter for milk, with the average price in Great Britain at A$2.20.

Innovations and Awards

Fermentrics (UK) Ltd. has been recognized by the UK Dairy Carbon Network for its innovative technology, winning the 2025 measurement technology competition. The UK Dairy Carbon Network collaborates with over 50 dairy farms, focusing on practical solutions to reduce GHG emissions.

Market Variability

The UK dairy market experiences significant variability, particularly in milk prices. The Department for Environment, Food & Rural Affairs (DEFRA) reported a milk price of 46.54ppl for September, marking the 15th consecutive month prices exceeded 40ppl. High milk production volumes have resulted in an oversupply issue, with Freshways disposing of surplus milk during the Christmas period, highlighting the supply-demand disconnect within the industry.

Renewable Energy and Logistics

Arla Foods is enhancing renewable energy access in the UK through long-term agreements to boost renewable electricity availability. Müller has expanded its dairy logistics operations with a new hub in Skelmersdale, UK, aiming to bolster export capabilities and improve operational efficiencies, creating numerous job opportunities in the region.

Promotions and Product Launches

Saputo Dairy UK operates the Davidstow creamery, promoting British dairy products through the British Dairy Promotion initiative. Danone and Arla have expanded in the UK's healthy dairy segment with new product lines focused on balanced nutrition and functional benefits.

Farmer Support and Innovations

The UK government has promised support to dairy farmers facing financial pressures, including increasing fuel, fertiliser, and labour costs. Arla Foods has launched a new central distribution center in Northamptonshire to manage its UK chilled palletised products. Northern Ireland's 'Innovation Farms' project seeks dairy and beef farmers to demonstrate sustainable practices under the Sustainable Agriculture Programme.

Recent Market and Legal Developments

Danone has expanded its recall of infant formula products to include the UK due to contamination concerns. The affected products include Aptamil and Cow & Gate in the UK. Arla Foods and XPO Logistics are launching a central distribution centre in Northamptonshire, UK, set to become operational by late 2027. This facility will centralize Arla's chilled dairy products, enhancing supply chain resilience and reducing road miles. The UK Supreme Court has ruled against Oatly, determining that oat-based beverages cannot be branded as 'milk'. The ruling reinforces EU regulations, which are still applicable in the UK as 'assimilated law', stipulating that terms like 'milk' can only describe the actual mammary secretion from milking, without any additions or extractions.

Economic Challenges in Wales

The Welsh dairy sector faces economic challenges. NFU Cymru warns of a potential £100 million loss to the Welsh rural economy due to a downturn in dairy prices. Milk prices have decreased by up to 15p per litre since autumn, impacting farm incomes and business viability.

Pricing in Northern Ireland

Lakeland Dairies provides specific pricing for Northern Ireland. For Northern Ireland, Lakeland Dairies set a base price of 26.3p/L for January milk, inclusive of the Sustainability Incentive Payment. Milk supply saw significant increases in key markets for Arla, with supply in the UK rising by 7.7% compared to 2024.

Modified: 2026/02/19