Welsh Dairy Industry Faces Economic Strain Amid Falling Milk Prices

NFU Cymru has raised concerns over a significant downturn in the Welsh dairy sector, estimating a £100 million economic loss between October 2025 and March 2026. This decline is attributed to a sharp drop in milk prices, which have fallen by up to 15p per litre since the autumn.

The union is actively engaging with the Welsh government, proposing eight key actions to mitigate the impact on farm incomes and production costs. These include suggestions for reforms in the Sustainable Farming Scheme and a comprehensive bovine TB eradication strategy. NFU Cymru President Abi Reader highlighted the immediate challenges, noting that most dairy farms in Wales are receiving milk prices below production costs.

Oversupply in Wales and beyond has led to reduced wholesale prices for dairy products such as cream, butter, cheddar, and powders. The Welsh dairy sector is particularly vulnerable because much of its milk is processed into cheese, a commodity experiencing significant price drops.

The union has met with Deputy First Minister Huw Irranca-Davies MS, stressing the urgency of government intervention. Abi Reader emphasized the need for an independent review of regulatory impacts, particularly highlighting the costs imposed by the Control of Agricultural Pollution Regulations.

Bovine TB continues to pose a significant challenge, with nearly 20% of Welsh dairy farms operating under restrictions in 2025. The financial and emotional toll of TB restrictions further complicates the economic landscape for dairy farmers.

Looking ahead, the union calls for fair and transparent market practices, urging the government to enforce milk regulations effectively. With further price announcements expected in March, Welsh dairy businesses face a challenging spring.