UK Dairy Production Reaches Record High Despite Falling Prices

The UK's dairy industry has seen a significant increase in milk production, with the 2025/26 season reaching a record 13.02 billion litres, as reported by the Agriculture and Horticulture Development Board (AHDB). In March alone, milk output was estimated at 1,132 million litres, reflecting a 1.8% increase year-on-year. This surge has resulted in an average daily volume of 36.51 million litres, underscoring the robust supply levels.

This increase in production represents a 5.0% rise compared to the previous year, marking the highest volume ever recorded for a milk year in the UK. Despite this growth, milk prices have been declining since late autumn, leading to concerns about the sustainability of farm margins. The AHDB noted that the milk-to-feed-price ratio remains in the 'expansion zone,' which has helped maintain production levels despite the challenging financial environment.

April's milk price announcements have largely remained stable, although they are considered unsustainably low by many producers. Rising input costs further squeeze margins, making the financial situation even more challenging for dairy farmers. Additionally, the rising supply is testing processing capacities, particularly as the spring flush brings additional volumes to market.

Favourable weather conditions have supported production, with the Met Office reporting a warmer-than-average March followed by sunny conditions in early April, which boosted grass growth and forage availability. However, sustained high output in a low-price environment poses risks to profitability. Maximizing value from forage is becoming increasingly critical for maintaining farm profitability.

Industry discussions at the latest milk forecasting forum suggested that elevated production levels might continue until at least the second half of the milk year, despite the pressure on farmgate returns. This ongoing trend highlights the resilience of the UK's dairy sector amid financial challenges.