Dairy farmers across Britain are facing a stark reality, as the cost of producing milk has become higher than the prices paid by milk processors, leaving them operating at a loss. Paul Tompkins, the chair of the dairy board at the National Farmers’ Union (NFU), laments the daily struggle, saying, “Every morning that I roll out of bed at 4.40am, I know I’m losing £1,800 that day, just by getting up.”
Tompkins, who runs a 234-hectare farm in the Vale of York, can produce milk for around 40p per litre from his 500-strong herd of black and white Holstein cows. However, he is being paid only 29p per litre by his milk processor, leaving him operating at a loss despite running his business as efficiently as possible.
The issue is not limited to Tompkins’ farm; the cost of production is the same as the national average, with dairy farmers sharing information to benchmark their businesses against others. “Every day we get up and try to do more with less,” Tompkins says.
If the current farmgate milk prices persist, Tompkins estimates his farm will make a loss of at least £660,000 this year. The decline in prices has been blamed on a global oversupply of milk, which is outstripping demand. According to the Agriculture and Horticulture Development Board (AHDB), British farmers produced more than 7% extra milk in the final three months of 2025 compared to the five-year average.
The situation has prompted some to wonder whether falling wholesale prices could help cool food price inflation and bring costs down for cash-strapped consumers. However, industry experts warn that the average time lag for lower prices feeding through to consumers is seven months, and the impact on retail prices may be limited.
Robert Craig, the chair of the Royal Association of British Dairy Farmers, says that unless farmers are on a cost-of-production-aligned retail contract, they are losing money or, at best, breaking even. The industry has also been hit by a host of other cost increases, such as fertiliser and fuel, as well as chronic labour shortages after Brexit and the pandemic.
The government has pledged to support British farmers, with the Environment Secretary, Emma Reynolds, praising their resilience in the face of volatile markets. However, significant numbers of dairy farmers have already left the industry, with nearly 20% of British producers quitting since October 2019. Industry experts warn that the latest milk price shock could lead to even more farmers calling it a day, with as many as 10% of dairy producers, or 700 farmers, potentially leaving the industry for good.