Freshways, one of the UK's largest milk processors, has cut the price it pays dairy farmers by 7p a litre to 29.4p a litre from 1 December, prompting warnings that confidence in the sector has reached rock bottom. The cut almost entirely reverses the combined 9p a litre in price increases Freshways introduced over the previous two months to support farmers after the summer drought. The company blamed weaker dairy markets and said poor returns for liquid milk were squeezing processors. Arla Foods, one of the three largest UK processors alongside Müller and First Milk, also announced a smaller cut of 0.45p a litre in November, reducing its standard milk price to 40.41p a litre, though it maintained the organic milk price at 58.25p a litre.
Most UK dairy producers were already being paid less for their milk than it costs to produce, following a year of volatile farmgate milk prices combined with the summer's drought and soaring costs for fuel and fertiliser triggered by the conflict in Iran. Ian Harvey, chair of the National Farmers' Union's dairy board and a dairy farmer in north Cornwall who runs a herd of 160 black and white Holstein cows and some Ayrshires, said milk is leaving farms at a loss and that the scale of the Freshways cut had shaken producers to the core. The NFU called the cut hugely disappointing. Harvey warned that while farmers could accept a gradual adjustment over two to three months, moving the price by such a large amount in one step is hard for producers to manage.
The price cut reflects longer-term market pressures dating back to August 2025, when autumn conditions boosted milk production in the UK and Europe, contributing to a global oversupply. During this summer's drought, milk volumes did not fall as much as expected because farmers provided animal feed to maintain production levels. Chris Walkland, a dairy market analyst, noted that Freshways is fiercely competitive when milk volumes are high, but that other processors including those making cheddar and mozzarella cheese have held their prices. Walkland also highlighted that many farmers cannot easily switch processors, as supermarkets control milk collection and pricing. Some large supermarkets including Tesco and Sainsbury's have committed to paying farmers based on production costs, but these arrangements are not universally available and other producers rely on co-operatives that are not open to all.
For consumers, major supermarkets including Tesco, Sainsbury's, Morrisons and Asda have increased the price of a four-pint bottle of milk by 10p to £1.75 in recent months, equivalent to just under 44p a pint or 77p a litre. Dairy margins have traditionally been tight in an industry where supermarkets have used low milk prices to attract shoppers. The latest processor cuts come at a time when farmers already face limited options for moving between suppliers, leaving producers with little negotiating power despite retail prices rising for consumers.