UK dairy farmers are facing fresh financial strain after milk processor Freshways announced a sharp reduction in the price it pays producers for liquid milk.
From 1 December, Freshways will cut its base milk price by 7p per litre, taking it to 29.4p per litre. The move follows a difficult year for dairy farmers, marked by volatile farmgate prices, drought, and rising costs for fuel and fertiliser.
The reduction almost reverses the 9p-per-litre increases Freshways introduced over the previous two months, which were intended to support producers after the hot, dry summer. The company said expected improvements in dairy markets had failed to materialise, while its own costs had risen.
Processor cites weak market
Freshways, which supplies bottled milk to corner shops, cafés, hotels and wholesalers, blamed weaker dairy markets and poor returns on liquid milk for its decision. Managing director Bali Nijjar said the company had been unable to recover the higher payments made to farmers through selling prices.
The processor also pointed to falling dairy commodity prices. Bulk cream values declined by 11% between September and October, while butter prices fell by 7%, according to figures cited by the company.
Nijjar said competition in the liquid milk market had reduced Freshways’ sales volumes, increasing the processing and distribution cost of each remaining litre. Raising customer prices further, he argued, risked losing more volume and reducing the amount of milk the company could sustainably buy from farms.
Farmers say confidence is low
Ian Harvey, chair of the National Farmers’ Union dairy board, said many producers were already receiving less for their milk than it cost to produce. He described confidence in the sector as being “at rock bottom”.
Harvey said the scale and speed of the Freshways cut had unsettled farmers. While some adjustment may have been expected, he argued that reducing prices by such a large amount in one step, rather than phasing it in over several months, would be difficult for producers to absorb.
He called the decision “hugely disappointing”, saying sudden and substantial price reductions undermined farmers’ ability to plan, invest and grow their businesses.
Other processors hold firm
Arla Foods, one of the UK’s three largest milk processors alongside Müller and First Milk, also reduced its standard milk price for November by 0.45p per litre, to 40.41p per litre. Its organic milk price remained unchanged at 58.25p per litre.
However, the Freshways reduction was notably larger than moves by other processors. Dairy market analyst Chris Walkland said several processors, including cheddar and mozzarella makers, had held their prices for December.
Walkland described the Freshways cut as “brutal”, particularly for farmers already dealing with higher production costs. He warned that further price reductions in January could not be ruled out if commodity markets did not recover.
Limited room to switch
Farmers’ ability to respond is constrained because changing milk processor can be difficult. Walkland said producers often have little say over who collects their milk or the price they receive, and that few processors are accepting new suppliers.
The episode highlights the pressure across the dairy supply chain: processors are facing weak commodity returns and competitive liquid-milk markets, while farmers are contending with high input costs and uncertain farmgate prices.
What it means
For Freshways suppliers, the December cut represents a substantial reversal of recent support. For the wider sector, it raises concerns that other processors could follow suit if dairy commodity markets remain weak.
The NFU’s message is that price stability matters as much as the headline milk price: without it, farmers say they cannot confidently invest in their herds, infrastructure or future production.
UK dairy farmers under renewed pressure as processor cuts milk price
