UK Dairy Farmers Face Existential Threat as Milk Prices Fall Below Production Costs
British dairy farmers are contending with severe financial pressures as the price paid for their milk has plummeted to between 32-35p per litre, whilst production costs now range from 42-49p per litre. This deficit, amounting to approximately 10p per litre, is pushing many family-run operations towards insolvency.
Ben Yates, a dairy farmer from Frome, Somerset, whose sons wish to continue in the industry, stated, “If we don't sort out the milk price pretty quickly, there'll be no industry left.” He highlighted the increasing number of empty dairy farms, observing that once a farm ceases dairy production, re-entry is improbable. Data from the Agriculture and Horticulture Development Board (AHDB) corroborates this trend, showing a reduction in the number of UK dairy farms to a record low of 7,010, down from 8,310 in 2020.
Tom Kimber, a tenth-generation dairy farmer in Charlton Musgrove, Somerset, described the situation as “terrifying.” He explained that farmers are “price-takers, not price-makers,” with monthly payments dictated by market forces. Unlike other commodities, milk cannot be stored, compelling daily production regardless of profitability.
Global Market Volatility and Rising Costs
The fluctuating global dairy market has significantly impacted UK farmers. Following the 2022 Russian invasion of Ukraine, a global supply shortage briefly saw farmers paid up to 55p per litre. However, by late 2023, increased global production led to a glut, driving prices down to their current unsustainable levels. Concurrently, operational costs have escalated, with 'red' diesel prices doubling after US military actions in Iran, and fertiliser costs increasing by 50% following the Ukraine conflict, with another 50% rise now imminent. Farmers, such as the Kimber family, often supplement their income through farm shops, but winter, with its higher feed and labour costs, presents a particularly daunting prospect at current milk prices.
