Freshways cuts milk price by 7p/litre in ‘brutal’ move

Freshways is cutting its base milk price by 7p/litre from 1 December, taking it to 29.4p/litre as weaker dairy markets and poor returns from liquid milk squeeze processor margins.

The reduction follows increases totalling 9p/litre in September and October, which the processor said were introduced to support farmers after a dry summer and to secure milk supplies before the additional costs had been recovered from the market.

See also: Milk price rises may be tempered by supply recovery

Managing director Bali Nijjar said expected improvements in dairy markets had failed to materialise, particularly for dairy fat, while liquid milk selling prices had not risen to reflect higher farmgate costs.

AHDB figures cited by Freshways show average bulk cream prices fell 11% between September and October, from £1,708/t to £1,528/t. October’s average was 23% lower than a year earlier, with cream now trading in the low £1,300s/t.

UK butter prices fell a further 7% in October and were 29% below the previous year, limiting returns from dairy fat.

Freshways said the shortfall in recovering higher milk costs through the market accounted for most of the price adjustment.

Highly competitive

The liquid milk market remained highly competitive, and attempts to increase selling prices risked further volume losses, raising processing and distribution costs per litre.

Chris Walkland, market analyst at Walkland Partnership, said he did not expect other processors to follow Freshways with similar reductions for December.

“But I do not think we can rule out further reductions for January if commodities do not pick up soon,” he said.

Mr Walkland described Freshways’ 7p/litre reduction as “a brutal cut” that would be difficult for farmers already facing additional costs.

He said the processor had made its earlier price increases on the expectation of stronger cream prices and tighter milk supplies, but higher deliveries and a difficult trading environment had made it harder to pass costs on to customers.

“The lessons from this are they shouldn’t have gone up 6p in October, nor assumed the cream price would stay where it was,” he said, adding that a smaller increase might have been more prudent.

Price and bonuses

As a result of the cut, from December, Freshways’ base price will be 29.4p/litre, with a 1p/litre sustainability bonus and a standard volume bonus of 0.6p/litre, giving a standard litre price of 31p.

Higher-volume suppliers may receive a larger bonus, subject to their agreements.

The processor said its price would still be 2p/litre above the level paid between February and August 2026.

Mr Nijjar said: “We would rather be clear with our farmers now than make a series of smaller reductions through the winter.”

Defra’s latest figures, published on 29 October, put the average UK farmgate milk price at 38.45p/litre in September 2026, up 4.8% on August but down 16% on the same month last year.