Freshways slashes milk price by 7p per litre
Major processor Freshways cuts its farmgate milk price by 7p per litre from 1 December, reversing recent gains and intensifying financial strain on UK dairy farmers amid volatile costs.
Freshways has cut the price it pays to farmers for milk by 7p per litre, effective 1 December. Dairy cooperative Arla Foods also reduced its standard milk price, by 0.45p to 40.41p per litre for November.
This abrupt cut represents an 18.4% fall from October's price and has drawn sharp criticism from the sector. The National Farmers' Union called the decision hugely disappointing. The price drop requires farmers to adjust to a sudden 7p per litre reduction rather than a phased decrease over months. For a farm producing one million litres annually, the cut translates to a monthly revenue loss of approximately £5,833.
Farmers face sudden financial shock with limited market options
Farmers have limited choice in processors and cannot easily switch to different buyers. The financial impact is immediate. If maintained for a full year, the 7p cut would mean an annual revenue loss of £70,000 for a one-million-litre farm. Ian Harvey, a dairy farmer and chair of the NFU dairy board, warned that confidence in the sector is at rock bottom. "Milk is leaving the farm at a loss," he said.
The summer drought did not significantly reduce milk volumes, as farmers used animal feed to maintain production. However, many entered autumn with depleted forage reserves. The announcement from Freshways follows substantial autumn price increases that were intended to secure milk supplies and stabilise production.
Broader market context shows mixed responses across processors
While Freshways made deep cuts, other processors responded differently. Dairy market analyst Chris Walkland noted that other processors, including those making cheddar and mozzarella cheese, have held their prices. Arla Foods kept its organic milk price steady at 58.25p per litre.
The dairy cooperative stated global milk supplies are stabilising at a high level. It also noted the whey protein market is slightly down from record highs, partly due to demand from GLP-1 weight loss drugs. Retail prices for consumers have moved in the opposite direction. Tesco, Sainsbury's, Morrisons and Asda increased the price of a four-pint bottle of milk by 10p to £1.75.
| Processor | Product | Price Change | New Price (pence/litre) |
|---|---|---|---|
| Freshways | Standard Milk | -7.0p | 29.4p |
| Arla Foods | Standard Milk | -0.45p | 40.41p |
| Arla Foods | Organic Milk | No change | 58.25p |
Volatile costs and uncertain production outlook compound pressure
UK dairy farmers are grappling with higher fuel and fertiliser costs, volatility linked to conflict, and the spread of Bluetongue disease. Production is expected to reach approximately 12.74 billion litres in 2026/27, but forecasts predict a 2.2% decline in Great Britain's milk deliveries for that period. Deliveries had already contracted over the summer.
Managing director of Freshways, Bali Nijjar, said an expected improvement in dairy markets has not materialised and that the company’s own costs have risen. The levy board AHDB stated recent farmgate price increases were aimed at stabilising production rather than reflecting stronger commodity returns. With commodity prices rising and disruption risks lingering, cost pressure continues to filter through the supply chain. Farmers will face continued margin pressure unless processing margins improve or input costs decrease.
