UK milk output surges amid price pressures for the market

UK milk production was up 7.4% year-on-year in September despite seasonal lows, driven by strong farmgate prices and lower feed costs, though weather-driven forage price increases added pressure. Forage growth in the month also supported the rising output. However, the abundant supplies have begun to weigh on prices, with Müller and Arla announcing cuts. Meanwhile, retail dairy prices remain high, and policymakers call for tighter regulations to ensure fairer returns for farmers across the supply chain.The UK’s milk production reached 1.24 billion liters in September, reflecting the widest annual gap compared to the previous year, at 7.4%. September is usually the month with the lowest milk output throughout the year, after which production rises as the second milking season begins.The overall content of valuable solids in milk also increased, with a slight decline in fat content (–0.03 percentage points) offset by higher protein levels (+0.09 percentage points). As a result, the total content of fat and protein solids rose by 9.7% compared to the previous year in September. Cumulative milk production reached 11.85 billion liters, an increase of 4.8% in liquid milk and 5.8% in milk solids.The elevated milk prices have been a major driver of production throughout the year. In October, farmgate milk prices averaged 46.54 pence per liter, up 7% compared to the previous year.Feed prices have also been favorable for investment in production. According to Defra, the average price of cattle compound feed declined 3.2% year-on-year, averaging £301 per ton in Q2 in Great Britain. Moreover, price declines were reported in September for feed ingredients such as wheat (–7.6%), barley (–8.1%), oats (–13.5%), soybean (–0.1%), soybean meal (–17.9%), and rapeseed meal (–24.7%).That said, weather challenges affected the availability and price of forages, with strong increases reported in grassland hay (+56.3%) and wheat straw (+25.4%). The combination of falling feed prices and still-high milk prices has maintained a favorable milk-to-feed ratio, supporting farmers’ output expansion.Forage production has been favorable since early September, providing another boost for milk output during the month. Further growth in forage availability is expected, as the forage growth rate had increased by 30.3% compared to the previous year as of October 31, according to the Agriculture and Horticulture Development Board (AHDB).Farmgate prices face correctionsAbundant milk production in the UK and other major producing countries continues to influence market conditions. Across 2025, the production gap has been closing at a monthly rate of 1.6 percentage points on average, underscoring how abundant milk supplies have been weighing on prices.Under these conditions, projections of a price correction are becoming a reality. Müller announced a 3.6% decline in farmgate milk prices to 40 pence per liter, effective from December 1. Arla’s price will also decline by 5.8%, to 42.71 pence per liter from November 1. The contraction is expected to affect primarily conventional milk production, while the organic market appears more resilient. With farmgate milk prices declining by up to 18% (Parkham Farms), farmers’ margins and livelihoods are under pressure.Consumers face higher pricesDevelopments at the last echelons of the supply chain contrast with the struggles of farmers. Consumers are feeling the effects of food inflation in milk and butter, along with beef and chocolate. The Energy & Climate Intelligence Unit (ECIU) reported an increase of 15.6% compared to the previous year in these products, citing the impact of extreme weather events on production costs.The annual price gap has also been noticed by consumers, who have increased their average spending on dairy by 6% compared to the previous year, despite a 1.2% decline in consumption as of October. The most significant declines were seen in liquid milk (–2.7%) and butter (–2.3%), while cheese (+1.6%) and yogurt products (+6.3%) recorded growth. The mismatch at both ends of the supply chain, slowing for farmers but accelerating for consumers, has attracted the attention of policymakers. Members of Parliament Anna Sabine (Frome and East Somerset) and Wera Hobhouse (Bath) have argued that the current framework favors retailers in reducing payments to producers. They call for more robust regulation in the dairy industry to ensure fair pricing along the supply chain, aiming to protect farmers’ margins and guarantee the sustainability of UK milk production.