Milk volumes hit record highs as farmgate prices hold

GB average daily milk production surpassed 38m litres for the first time in mid-April, with volumes expecting to climb even further as the spring flush approaches in early May.

Daily milk deliveries are more than 6% up on this time last year, with the milk-to-feed price ratio in the expansion zone, encouraging farm businesses to produce as much milk as possible.

Independent dairy market analyst Chris Walkland calculated that roughly 90m litres of additional milk had been produced so far this year.

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This has meant many processing sites are operating at full capacity, which has led to the spot price falling below 10p/litre.

NFU Dairy Board chairman Paul Tompkins said: “The 2025 spring flush has seen high volumes of milk, with good grass growth and a strong milk-to-feed price ratio supporting production, which has been putting a strain on processing capacity, with some skim being put into [anaerobic disgester] plants.”

However, despite a surplus of milk in the UK, dairy commodity markets continue to be strong, with good demand from the EU, where volumes are tighter.

UK wholesale butter traded at £6,050/t in April, up by 23% on the year, while bulk cream was up by almost 30% on the year at £2,625/t.

Ian Powell, managing director of The Dairy Group, said: “The business outlook remains challenging, but milk price is remarkably firm despite UK milk production running about 3% above last year for most of the winter.”

The Dairy Group estimated the average cost of production at 44.8p/litre for the year to March 2025, and it expects this to increase to 45.3p/litre for the current milk year.

However, it says this figure will vary significantly between enterprises, from 39p/litre to 51p/litre.

Mr Powell added: “We expect to see a reduction in purchased feed cost and rent and finance, but inflation of about 3% increasing all other costs.”

Market developments and prices

Arla Foods has announced it will hold its milk price at 48.02p/litre for a manufacturing litre into May.

The UK’s largest dairy co-operative has also recently started to build its £179m mozzarella plant in Devon, which is due to open in 2027.

However, it has come under scrutiny more recently, after Arla confirmed plans to shut down its site at Settle, North Yorkshire next year, which could lead to 130 job losses.

It is understood Arla plans to move production to its Lockerbie site, where it has recently announced a further £90m investment.

Earlier in April, Arla unveiled plans to merge with Germany’s largest dairy co-operative, DMK Group.

Major processor Muller has confirmed it will hold its milk price again into June at 42.25p/litre for a liquid litre, including its quarterly advantage premium.

A factory breakdown at the Muller-owned Yew Tree Dairy site in Lancashire, which led to thousands of litres of milk being dumped on farm last week, appears to have been resolved.

Muller recently acquired yoghurt brand Biotiful Gut Health for an undisclosed sum.

Richard Williams, chief executive of Muller Yoghurt and Desserts, said: “We are already growing and optimising our range of health and nutrition products, and Biotiful Gut Health will really help us expand into new growth areas to meet changing consumer needs.”