UK Dairy Farmers Face Financial Strain as Milk Prices Plummet

British dairy farmers are currently facing severe financial challenges due to a sharp decline in milk prices. According to Yorkshire farmer Paul Tompkins, it costs approximately 40p to produce a litre of milk, while processors are paying an average of just 29p. This disparity is causing significant daily financial losses for farmers, threatening their economic viability.

The Agriculture and Horticulture Development Board (AHDB) reports that British farmers produced over 7% more milk by the end of 2025 compared to the five-year average. This increase, combined with a global overproduction of milk, has led to surplus stock that processors are struggling to manage, resulting in the disposal of some dairy products.

Since October 2019, almost 20% of dairy farmers in the UK have exited the industry, with the number of farmers dropping from 8,720 to 7,010. The current pricing crisis could potentially lead to an additional 10% of producers leaving the sector.

The UK government has promised support to farmers; however, they are also dealing with increasing fuel, fertiliser, and labour costs, alongside tax changes. Despite these pressures, consumers are unlikely to see a rapid decrease in retail dairy prices. AHDB estimates that retail prices typically lag by around seven months following a drop in production prices.

In particular, the price of butter may decrease from spring, and cheese prices might drop by summer. However, prices in cafes and coffee shops are expected to remain high for the foreseeable future.