NFU Cymru: rising costs squeeze Welsh dairy margins despite recovering milk prices
In a statement dated October 20, NFU Cymru said the dry summer had restricted grass growth, prompting farmers to draw on forage intended for winter. This had raised concerns about how much feed remained and its quality. Martin Griffiths, the union’s dairy board vice-chair, highlighted the pressure on producers’ margins.
The union cited Agriculture and Horticulture Development Board (AHDB) figures showing that red diesel cost 50% more than in September 2025. Ammonium nitrate fertiliser was around 20% more expensive than in February 2026. NFU Cymru also sought amendments to the Sustainable Farming Scheme (SFS), including a broader range of habitat options incorporating clover and workable requirements for multi-species leys.
AHDB’s October 23 market update described divergent conditions across dairy commodities. Cream and butter markets were weakening, with large butter inventories putting downward pressure on prices. Demand for protein, meanwhile, was supporting skimmed milk powder.
According to AHDB, those differences called into question whether some autumn increases in farm milk prices could be sustained. The position depended on which products processors manufactured. Processors’ contracts and product portfolios influence how wholesale market movements feed through to payments to individual farms.
The Welsh Government raised advance payments for both the SFS and the Basic Payment Scheme (BPS) to 80% of anticipated entitlement, up from 70%, to support business cash flow. Figures released for October 14 showed that 90% of claimants under the SFS Universal Layer had received advances, alongside 94% of BPS claimants.
Payments of the remaining balances are scheduled to start in mid-December. Farmers claiming under the SFS must bring their Universal Dashboard up to date through RPW Online. The government also urged farmers to review their accounts for unresolved queries that could delay payment.
