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UK dairy farmers face further pressure as milk processor cuts prices
Freshways will cut the price it pays dairy farmers by 7p a litre from 1 December, leaving its rate at 29.4p. The sharp reduction has unsettled producers already facing losses, after drought and higher fuel and fertiliser costs added to a year of volatile milk prices.
Arla Foods is also reducing its standard milk price, by 0.45p a litre in November to 40.41p, while leaving its organic rate unchanged at 58.25p. Freshways cited weaker dairy markets and rising costs; analysts point to high milk supplies following strong production last autumn and output holding up through this summer’s drought. Some supermarkets pay suppliers according to production costs, but farmers may have limited choice over which processor collects their milk.
In short
- Freshways is cutting its milk price by 7p a litre from December.
- Arla is making a smaller cut to its standard milk price.
- Farmers are already grappling with costs and oversupply.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Processors can argue that lower prices reflect weaker dairy markets and abundant milk supplies, while their own costs are rising. Adjusting what they pay may help keep businesses viable and avoid accumulating unsold milk, especially when production has remained strong despite drought.
The case against
Farmers can argue that a steep price cut shifts the pressure of market volatility and rising costs onto producers, many of whom are already making losses after a difficult year. With limited choice of processor, they may have little ability to find a better price, and payments that do not reflect production costs could threaten the viability of farms.