United Kingdom Dairy Industry Overview

The United Kingdom holds a significant position in the global dairy market, boasting an annual milk production of approximately 15 billion liters. The country supports a substantial dairy cattle population of around 1.8 million, contributing notably to the international dairy supply chain.

Dairy Processing and Production

The UK's dairy sector is equipped with advanced processing facilities, which produce about 450,000 tonnes of cheese, 150,000 tonnes of milk powder, and 300,000 tonnes of whey annually. These capabilities enhance its competitiveness in global markets and underpin significant export activities.

Key Dairy Enterprises

Prominent companies in the UK dairy sector include Arla Foods, known for its innovation, and Müller, which supports smaller farms with enhanced processing capabilities. Long Clawson Dairy is acclaimed for its Stilton cheese, while Millbrook Dairy is recognized for its charitable contributions.

Export and Import Dynamics

The UK actively participates in international dairy trade, with exports valued at approximately £1.6 billion annually. However, imports exceed exports, amounting to £2.2 billion, driven by high domestic consumption. The European Union remains the primary market for UK dairy exports, with exports reaching £1.1 billion in the first half of 2025, marking a 20% increase from the previous year.

Recent Events and Developments

Recent developments in the UK dairy sector include product launches by Arla and initiatives by Müller to support small farms. The Dairy Roadmap coalition focuses on climate and sustainability goals, with Arla Foods planning to upgrade its Oswestry plant with robotic technology. In Northern Ireland, innovation is emphasized, while Scotland's Rural University and College is investing in sustainability research.

Trends and Challenges

The UK dairy industry faces challenges such as livestock import restrictions and evolving market demands. Despite a decrease in the number of dairy farms, increased milk production per farm has resulted in a 10% rise in milk output year-on-year. Ice cream consumption remains strong at about 320 million kilograms annually. Other challenges include milk collection issues and a shift towards health-conscious consumer preferences.

Sustainability Initiatives

Over 50 UK dairy farms have joined the Dairy Carbon Network to reduce emissions and enhance productivity. Arla has launched its Cultura product line focused on gut health. The UK dairy sector leads in the adoption of sexed semen, particularly 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 experienced financial recovery due to higher milk prices and reduced feed costs. Northern Ireland is addressing 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 prompted UK MPs to advocate for stronger regulation of the dairy industry. A dairy farm in Tyrone invested £750,000 to transform its operations, boosting 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 $A2 per liter for milk, with the average price in Great Britain at $A2.20.

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 across the UK, focusing on practical solutions to reduce GHG emissions.

Market Variability

The UK dairy market is experiencing 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. This period coincides with high milk production volumes of 1,239 million liters for the same month.

Upcoming Regulatory Changes

The UK government plans to impose a 'milkshake tax' starting in April 2027, aiming to eliminate longstanding dairy exemptions from the Soft Drinks Industry Levy by 2028. This initiative seeks to bolster government revenue by an estimated £100 million annually as part of a strategy to address a £20 billion budget deficit.

British Dairy

The campaign focuses on the nutritional benefits of British dairy, promoting products such as milk, cheese, and yogurt, and supporting environmentally friendlier farming practices. Kerry Group launched the Smug brand in the UK, though it faced difficulties with initial lines being discontinued before a planned relaunch. Trewithen Dairy's Cornish Double Cream will be stocked in 500 Tesco stores nationwide, in addition to regional outlets across the UK.

Innovative Approaches

UK dairy farmers are adopting creative methods, such as cow cuddling, to sustain their income. In the UK, Fiona Wilson converted her milking parlor into a dedicated cuddling area, offering a four-hour cuddling experience, which now entirely replaces her previous income from milk sales.

Animal Welfare Concerns

Recent investigations revealed severe animal welfare violations at two dairy farms in Cornwall supplying milk for Cathedral City cheese. The UK government plans to extend the Soft Drinks Industry Levy to include milk and yogurt-based drinks by 2028, raising concerns from Dairy UK about the impact on dairy products.

Graham's The Family Dairy

Based in Scotland, Graham's The Family Dairy is navigating challenges such as inflationary pressures and increased supply chain costs. The campaign emphasizes the company's commitment to its Scottish roots and the role of dairy in uniting families during the Christmas season.

First Milk Limited

First Milk Limited, a prominent dairy cooperative in the UK, is tackling challenges in the dairy market while focusing on maximizing the value of its members' milk. The UK-based software platform Map of Ag is helping dairy farmers reduce methane emissions through detailed data analysis.

Financial Pressures in Northern Ireland

Dairy farmers in Northern Ireland are facing significant financial challenges due to falling milk prices and rising production costs. The reduction in milk prices has coincided with persistently high production costs, including expenses for feed, fertilizer, fuel, energy, and veterinary services.

Welsh Dairy

The Welsh dairy sector produces some of the best milk in the UK. Millbrook Dairy's Shirgar Cheese Sticks are produced in Wales using high-quality Welsh milk, highlighting the exceptional quality of British dairy products.

Milk Prices in Northern Ireland

Milk prices in Northern Ireland are set at 28.8p/L for November, inclusive of the Sustainability Incentive Payment, representing a decrease of 3.5p/L compared to the previous month. UK farming unions have issued a joint letter to milk processors emphasizing the need for transparency and fair practices as the dairy sector faces significant challenges.

Lactalis UK & Ireland

Lactalis UK & Ireland has launched a new Président Spreadable Creamy Brie with Truffle as a strategic move to enhance its presence in the festive cheese market. ReGenEarth plans to use the Sedgefield project as a model for further AD-pyrolysis developments both within the UK and internationally.

Challenges Facing Welsh Farmers

Welsh farmers are facing severe challenges due to a significant drop in milk prices, with forecasts predicting further declines. The Farmers' Union of Wales (FUW) reports that milk prices have drastically dropped over the autumn season.

Leprino Foods

Leprino Foods operates a significant processing facility in Northern Ireland producing 50,000 tons of mozzarella annually.

Location of Granarolo UK Ltd's New Distribution Warehouse

Granarolo UK Ltd has inaugurated its new distribution warehouse in Willenhall, nearly three years after a fire destroyed the previous facility. The British brand will introduce three flavors across major UK retailers. All Things Dairy is a British dairy brand expanding its product offerings in response to increasing consumer demand for high-protein, low-UPF foods. In the UK, Kerry Dairy's Smug Dairy hybrid milks are being phased out. Despite positive reviews, the brand is preparing for a relaunch with a new product lineup next year.

Dairy Farm Decline

The number of dairy farms in Britain has dropped to an all-time low, sparking fears about food security. The Agriculture and Horticulture Development Board (AHDB) has reported that the number of dairy farms in the UK has reached a record low, with only 7,010 producers remaining last year. This marks a steep decline from the 8,720 farms in operation in 2019 and an 85% decrease from the 46,000 producers in 1980. UK milk production has increased significantly, and farmgate prices have dropped sharply. UK milk production has surged, averaging 43.8 million litres per day over a recent two-week period, marking a 5.1% increase compared to the same period last year. Farmgate prices in the UK are projected to decline by approximately 25% between October and January, potentially surpassing the 30% drop observed during the 2023 price crash. Farmers in Fermanagh are experiencing a drop in gate prices for milk. Following a meeting of the four UK farming unions, including the Ulster Farmers’ Union, a joint open letter was issued to milk processors. An increase in milk production across the UK and internationally has contributed to the decrease in prices. NFU Scotland is calling for urgent support for dairy farmers in Scotland, a part of the UK, facing drastic declines in milk prices.

Arla's Proposed Closure of Settle Plant

Arla proposed investing in a UHT center in Lockerbie, Scotland, and possibly closing the Settle plant.

Modified: 2025/12/26