Key facts
- Freshways managing director Bali Nijjar said expected improvements in dairy markets had not materialised and its costs had risen.
- Arla Foods said global milk supplies were stabilising at a high level and the whey protein market had fallen slightly from record highs.
- The NFU called the Freshways cut hugely disappointing, and dairy board chair Ian Harvey said it had shaken farmers to the core.
- Analyst Chris Walkland said Freshways is fiercely competitive, especially when milk volumes are high.
- Tesco, Sainsbury's, Morrisons and Asda raised the price of a four-pint bottle of milk by 10p to £1.75 in recent months.
Freshways, a UK milk processor that supplies bottles of milk to corner shops, cafes, hotels and wholesalers, told farmers it will cut the price it pays for their milk by 7p a litre from December 1, 2026, taking it to 29.4p a litre. The company blamed weaker dairy markets and said poor returns for liquid milk were squeezing processors. The cut almost wipes out the combined 9p a litre of increases Freshways introduced over the previous two months to support farmers after the hot, dry summer.
Freshways managing director Bali Nijjar said expected improvements in the dairy markets had not materialised and its costs had risen. Arla Foods, one of the three largest UK processors alongside Müller and First Milk, also said it was cutting 0.45p a litre from its standard milk price in November, to 40.41p a litre, while keeping its organic milk price unchanged at 58.25p a litre. Arla said global milk supplies were stabilising at a high level, although the whey protein market had fallen slightly from record highs.
Ian Harvey, a dairy farmer in north Cornwall and chair of the National Farmers' Union's dairy board, said the size of the Freshways cut had shaken farmers. "It's shaken us to the core," he said, adding that moving the price by such a large amount rather than phasing it over two to three months is hard for farmers to cope with. Harvey said he has not been directly affected because his milk is processed locally into cheddar cheese, but he speaks to many producers who were already struggling. The NFU called the cut "hugely disappointing".
Dairy market analyst Chris Walkland said the Freshways cut came as other processors, including those making cheddar and mozzarella, held their prices. He said Freshways is "fiercely competitive, especially when milk volumes are high", and that last autumn was positive for milk production in the UK and Europe, contributing to a global oversupply. Milk volumes did not fall as much as expected during the summer drought, as farmers fed cows animal feed when grass stopped growing.
Farmers who want to switch processor often have little say in who collects their milk or the price they are paid. Tesco and Sainsbury's have committed to paying their farmers based on the cost of production, and some producers belong to cooperatives, but these groups are not open to all. Tesco, Sainsbury's, Morrisons and Asda raised the price of a four-pint bottle of milk by 10p to £1.75 in recent months, which equates to just under 44p a pint or 77p a litre.