Britain's dairy farmers face a bleak outlook, with daily losses of £1,800 for Paul Tompkins, the third-generation farmer running his 234-hectare farm in Yorkshire. Despite trying to run his business efficiently, he is being paid just 29p per litre by his milk processor, leaving him operating at a loss. The current price of milk on the market is 41p a pint or 73p a litre, equating to £1.65 for four pints.
Margins have always been tight in the dairy industry, with supermarkets traditionally using low milk prices to tempt shoppers through the door. The UK processing industry is dominated by three main players: Arla, Müller and First Milk. Tompkins, who chairs the dairy board at the National Farmers' Union, says that farmers are good at sharing information, but this has not been enough to counteract the decline in milk prices.
If farmgate milk prices remain low, Tompkins estimates that his farm will make a loss of £660,000 this year. However, experts warn that prices may continue to fall, leading to even bigger losses for farmers. Mike Houghton, a farm consultant and partner at Andersons, says that the current decline in prices is a result of global oversupply, with more milk being produced than demand can absorb.
The latest price shock comes as farmers face other cost increases, such as fertiliser and fuel costs, as well as chronic labour shortages. The government's move to introduce inheritance tax on agricultural assets above £2.5m has also been a concern. Environment secretary Emma Reynolds recently told an agricultural audience that the government would support British farmers, but many farmers say they have little choice in who collects their milk or what price they are paid.
As a result, significant numbers of dairy farmers have already left the industry since the pandemic. Nearly 20% of British producers have quit since October 2019, cutting their numbers from 8,720 to 7,010 in just six years. Despite this, the volume of milk produced in Britain has stayed steady, thanks in part to consolidation in the sector and remaining producers working to become more efficient.
Experts warn that the latest price shock will lead to even more farmers leaving the industry. Houghton predicts that as many as 10% of dairy producers – or 700 farmers – could leave for good. The average time lag for lower prices feeding through to consumers is seven months, according to the AHDB. Retail prices for butter are expected to fall "but not until April, with the biggest price drops from June", wrote Grace Withers, AHDB's lead retail insight manager in a recent research note.
Meanwhile, dairy farmers and industry experts say that lower milk prices will have little impact on consumers. Milk and dairy are a significant cost but far and away not the only one," says Jeffrey Young, the chief executive of the consultancy Allegra Group. "Rent and people costs are way more substantial. The minimum wage is going up again. Chains might reduce their price increases but it's unlikely that lower prices will be passed on to consumers."
Margins have always been tight in the dairy industry, with supermarkets traditionally using low milk prices to tempt shoppers through the door. The UK processing industry is dominated by three main players: Arla, Müller and First Milk. Tompkins, who chairs the dairy board at the National Farmers' Union, says that farmers are good at sharing information, but this has not been enough to counteract the decline in milk prices.
If farmgate milk prices remain low, Tompkins estimates that his farm will make a loss of £660,000 this year. However, experts warn that prices may continue to fall, leading to even bigger losses for farmers. Mike Houghton, a farm consultant and partner at Andersons, says that the current decline in prices is a result of global oversupply, with more milk being produced than demand can absorb.
The latest price shock comes as farmers face other cost increases, such as fertiliser and fuel costs, as well as chronic labour shortages. The government's move to introduce inheritance tax on agricultural assets above £2.5m has also been a concern. Environment secretary Emma Reynolds recently told an agricultural audience that the government would support British farmers, but many farmers say they have little choice in who collects their milk or what price they are paid.
As a result, significant numbers of dairy farmers have already left the industry since the pandemic. Nearly 20% of British producers have quit since October 2019, cutting their numbers from 8,720 to 7,010 in just six years. Despite this, the volume of milk produced in Britain has stayed steady, thanks in part to consolidation in the sector and remaining producers working to become more efficient.
Experts warn that the latest price shock will lead to even more farmers leaving the industry. Houghton predicts that as many as 10% of dairy producers – or 700 farmers – could leave for good. The average time lag for lower prices feeding through to consumers is seven months, according to the AHDB. Retail prices for butter are expected to fall "but not until April, with the biggest price drops from June", wrote Grace Withers, AHDB's lead retail insight manager in a recent research note.
Meanwhile, dairy farmers and industry experts say that lower milk prices will have little impact on consumers. Milk and dairy are a significant cost but far and away not the only one," says Jeffrey Young, the chief executive of the consultancy Allegra Group. "Rent and people costs are way more substantial. The minimum wage is going up again. Chains might reduce their price increases but it's unlikely that lower prices will be passed on to consumers."
It's crazy how much milk farmers in UK are losing out 
£1,800 daily losses? That's like paying me £41k per year for doing nothing 
But seriously, it's just not sustainable. They need better compensation than 29p a litre 
. £1,800 a day in losses for just one farm is crazy 
️. The fact that supermarkets always use low milk prices to attract customers might seem like a good deal, but it ends up hurting the farmers who actually produce the milk 
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. It's not just the financial struggles that are concerning, but also the chronic labor shortages and increasing costs like fertilizers and fuel 
. The government needs to step in and offer more support to farmers, whether it's through price stabilization or other forms of assistance 
.
. Milk is just one part of the overall grocery bill, and there are many other costs that people have to consider 
. I hope the government can find a way to help farmers without harming the consumers who rely on dairy products 
. The dairy industry has always been tough, but this is ridiculous. I mean, supermarkets are already undercutting each other with prices... it's a mad cycle.
. We need action, not just empty promises. The farmers' situation is only going to get worse if we don't do something about it. I wish more people would raise awareness about this issue and push for change 
i mean, the farmers are basically working with empty pockets and the supermarkets just keep on buying at rock bottom prices. what's going on?! 
its like they're at the mercy of big corporations. experts say it might get even worse with more farmers leaving the industry... 700 could leave for good? that's a huge number 
Milk prices are so low farmers are losing £1,800 a day 
Farming is not a joke, these margins have always been tight 
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. The inheritance tax on agricultural assets above £2.5m is a big concern for many farmers, and the chronic labour shortages aren't helping either 
. Still, I feel for the farmers who are struggling to make ends meet 
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. The government might be supporting them, but sometimes words aren't enough, you know? We need to make sure our dairy farmers are paid what they're worth