British dairy farmers are operating at a loss due to the collapse of milk prices

Dairy farmers in the UK are in crisis as milk prices have fallen sharply, falling below the cost of production.

Yorkshire farmer Paul Tompkins says it costs around 40p to produce a litre of milk, while processors are paying an average of 29p. This means daily losses and the risk of losing hundreds of thousands of pounds a year.

Experts say the fall in prices is due to a global overproduction of milk, with rising volumes in the US and steady supplies from New Zealand amid weaker demand from China. According to AHDB, British farmers produced more than 7% more milk at the end of 2025 than the five-year average. Processors have been unable to cope with the surplus, which has in some cases led to the disposal of products.

Financial pressures have already led to a reduction in the industry, with almost 20% of dairy farmers leaving the business since October 2019, down from 8,720 to 7,010. Experts predict that up to 10% more producers could leave the industry due to the current price shock.

The government has pledged support for farmers, but they are also facing rising fuel, fertiliser and labour costs, as well as tax changes. At the same time, consumers will not see a rapid drop in dairy prices: AHDB estimates that in both situations, retail prices typically fall no sooner than seven months later. In particular, butter could fall in price from spring and cheese from summer, while prices in cafes and coffee shops are expected to remain high.

Tags: UK, prices