UK Dairy Farmers Face Significant Milk Price Reductions in December

UK farmgate milk prices are projected to drop below 40p per litre before the year's end as processors implement further cuts to counteract falling wholesale returns and persistent oversupply. The dip in UK and European wholesale prices for butter, cheese, and cream has exacerbated this trend, with spot milk prices quoted below 20p per litre. Additionally, GB milk deliveries remain more than 6% higher than the previous year, further pressuring the market.

First Milk will reduce its standard manufacturing litre by 6p to 35.85p per litre, including its member premium, in December. Vice-chairman Mike Smith described the move as 'very disappointing but necessary' due to the ongoing supply-demand imbalance. Arla has also decreased its conventional manufacturing price by 2.63p per litre for November, equating to a liquid price of 40.95p per litre, while warning of continued negative market momentum.

Similarly, Muller will pay 40p per litre for a standard liquid litre in December, a reduction of 1.5p per litre. The company recently introduced amended contracts for producers supplying its Skelmersdale site, offering revised pricing under the Muller Direct and ingredients models. Barber's Cheesemakers suppliers will see prices fall by 3.87p per litre to 38.64p per litre, and Freshways will reduce its December price by 2p per litre to 34p per litre, citing 'immense pressure' from oversupply and declining returns.

Freshways managing director Bali Nijjar highlighted the drop in cream prices to £1,750, down from £1,986 in September, with spot milk prices at their lowest seasonal level on record. Analysts suggest that without a significant reduction in milk output or increased demand from export markets, recovery in farmgate prices may not occur until the second half of next year.