Dairy producers hit by further milk price cuts in December

Farmgate milk prices continue to tumble, with many producers set to receive less than 40p/litre before the end of the year.

Falling UK wholesale prices for butter, cheese and cream, and weakening commodity markets across Europe point to a fairly bleak outlook for producers.

Meanwhile, ample global supplies and GB milk deliveries still running more than 6% higher than this time last year have added further pressure to dairy markets.

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This has resulted in spot prices being quoted at below 20p/litre.

Concerningly, industry sources suggest prices are likely to remain low post-Christmas and into the spring if supplies remain high, with little uplift expected until the second half of 2026.

Milk price cuts

Processors have slashed farmgate milk prices again for November and December in a bid to curb supplies and maintain margins.

First Milk has confirmed it will cut its standard manufacturing litre by a further 6p/litre in December to 35.85p/litre, including its member premium.

Mike Smith, farmer director and vice-chairman at First Milk, said: “We recognise that this is very disappointing news for all of our members, and it was not a decision that was taken lightly.

“However, given the continued disparity between demand and supply that is negatively impacting the dairy markets and our returns, it is necessary.”

Arla has cut its conventional manufacturing price by 2.63p/litre for November to 42.71p/litre, equating to a liquid price of 40.95p/litre.

Negative momentum

The major dairy co-operative says negative momentum is likely to continue for conventional milk prices, hinting that further price cuts could follow.

Muller will pay its producers on direct contracts 40p/litre for a standard liquid litre in December, a 1.5p cut on month earlier levels.

New amended contracts issued by Muller to Yew Tree Dairy producers supplying its Skelmersdale site came into effect from 1 November.

A Muller spokesman confirmed to Farmers Weekly that all Skelmersdale supplying farmers had the option to either receive a Muller Direct Skelmersdale price, calculated using a combination of the existing Muller Direct liquid and ingredients price, or a Muller ingredients price.

Farmers supplying Barbers Cheesemakers will see milk prices fall by 3.87p/litre to 38.64p/litre in December, based on a standard manufacturing litre.

Freshways has made a further reduction of 2p/litre in December which will take it to 34p/litre, citing immense pressure due to significant oversupply and weakening returns.

Bali Nijjar, managing director at Freshways, said: “The AHDB published price for September was £1,986, but cream prices have now dropped to a record low of £1,750.

“Spot milk prices have also fallen to levels we’ve never seen before at this time of year – lower even than during the spring flush.

“These low spot prices are currently the most costly aspect of the market downturn.”