Freshways cuts milk price by 7p a litre, sparking concern among UK dairy farmers

Freshways price cut announced

Freshways, a major milk processor that supplies bottled milk to corner shops, cafés, hotels and wholesalers, has announced that it will reduce the price it pays farmers for liquid milk by 7p per litre. The new rate, effective from 1 December, will be 29.4p per litre. The decision follows a period in which Freshways had increased the price it paid by a total of 9p per litre over the previous two months in an attempt to support producers after a hot, dry summer.

The managing director of Freshways, Bali Nijjar, said that expected improvements in the dairy markets had not materialised and that the company’s costs had risen. The cut is described by the company as a response to weaker dairy markets and poor returns for liquid milk.

Arla Foods, one of the three largest processors in the UK, also announced a reduction in its standard milk price. In November, Arla lowered the price by 0.45p per litre to 40.41p per litre, while keeping the organic milk price unchanged at 58.25p per litre.

Background

UK dairy farmers have faced a difficult year characterised by volatile farmgate milk prices, a summer drought and rising production costs. Many producers were already receiving payments that fell below the cost of production. The conflict in Iran has contributed to higher fuel and fertiliser prices, further squeezing margins.

The dairy sector has seen a series of price adjustments by processors. Freshways had previously introduced a 9p per litre increase over two months to support farmers, but the recent cut almost negates that support. Arla’s reduction follows a period of stabilising global milk supplies, although the whey protein market has fallen slightly from record highs.

Why it matters

The price cuts mean that farmers are receiving less revenue for each litre of milk sold. According to statements from farmers, the sector’s confidence is at a low point. The reductions are expected to increase financial pressure on producers who already operate on thin margins. The cuts also reflect broader market challenges, including high input costs and uncertain demand.

What happens next

The sources do not provide specific information on future actions or dates beyond the announced price changes. Freshways and Arla have not indicated any further adjustments at this time.