Two of the UK’s biggest milk processors, Arla and Muller, are cutting farmgate prices as rising global milk prices continue to push the market down and squeeze profits for dairy producers.
From 1 December, Arla’s conventional milk headline price will fall by 3.50 ppl to 39.21 ppl, while the organic price will remain unchanged at 57.95 ppl.
Although milk supplies are increasing rapidly in both global and EU markets, retail and industrial demand remains stable.
Market prices have adjusted downward as processors struggle to find short-term outlets for additional production, and persistent oversupply continues to weigh on the outlook.
Arla said the organic market is now more stable, with supply and demand “balanced for now.”
Mueller also announced a pay cut. Dairy farmers who supply processors and meet the conditions of the Müller Advantage scheme will receive 38.5 per cent from 1 January 2026 (a reduction of 1.5 per cent).
Richard Collins, director of agriculture at Muller Milk & English, said: ‘Unfortunately, we cannot ignore the continuing pressures evident across the dairy market.
“Market prices have been reduced and daily collections are still significantly higher than last year,” he said, adding that the company is “closely monitoring supply and demand.”
The price cuts highlight the bleak outlook for the UK dairy sector heading into winter. Analysts say milk production is recovering faster than demand in several major markets, putting downward pressure on Farmgate’s earnings.
For many UK dairy farmers, the cuts mean further pressure on already tight profit margins amid high input costs, weak exports and weak retail demand.
Analysts expect milk prices to remain under pressure until early 2026 unless global demand strengthens or production levels ease.
