Dairy farmers in Wales have seen milk prices fall by up to 15p a liter since the autumn, with NFU Cymru pressuring ministers to take urgent action to safeguard the future of the sector.
The union estimates that a conservative estimate of £100m will be lost from Wales’ rural economy between October 2025 and March 2026 as a result of falling farmgate prices.
NFU Cymru met with Deputy First Minister Hugh Ilanka-Davies this week and set out eight key actions it believes the Welsh Government should take to support farm incomes and reduce production costs during the current economic downturn.
While the long-term outlook for dairy products remains positive due to increased global protein demand, the short-term outlook is much more challenging.
Oversupply in Wales and abroad has led to falling wholesale prices for cream, butter, cheddar and powder, leading to plummeting farm milk prices.
The Welsh sector is particularly at risk, as most of the milk processed within Wales is made into cheese, and cheese is one of the products hardest hit by falling wholesale prices.
NFU Cymru chairman Abi Rieder said: “These are very difficult times for the Welsh dairy sector, with most farms in Wales receiving prices well below the cost of producing their milk.”
He warned that rapid price declines are restricting cash flow, delaying investment decisions and threatening business survival.
“The March price announcements have already been made and will conservatively estimate that £100m will be taken out of Wales’ rural economy over the six months from October 25 to March 26,” she added.
Some of the union’s proposals include sustainable farming system reforms to ensure sustainable farming systems are viable for dairy farms, an independent review of the cumulative regulatory burden on farmers, a comprehensive bovine tuberculosis elimination strategy, and closer collaboration with agricultural supply chain examiners to ensure the Fair Trading Obligations (Milk) Regulations 2024 are appropriately applied.
Mr Rieder said sustainable farming schemes need to evolve in a way that supports productivity, avoids duplication of farm guarantee requirements, and is backed by budgets commensurate with ambition.
He also called for an independent review of the impact of regulatory and planning frameworks on farmers, naming the Agricultural Pollution Control Zone (NVZ) as a “blunt, inefficient and overly bureaucratic” system that imposes high costs.
He said many dairy farmers were being asked to invest hundreds of thousands of pounds to become compliant, at a time when their cashflow was already under severe pressure.
Bovine TB remains a major challenge and by 2025 almost one in five dairy farms in Wales will be operating under TB regulations.
“They continue to cause economic and psychological stress, limit profitability and depress investment,” Rieder said, urging ministers to implement a comprehensive eradication strategy.
He added that a fair and transparent market is essential in times of economic downturn, and called on the government to ensure milk regulations are implemented “in the spirit as intended”.
With further milk price announcements expected in March, many dairy companies in Wales are currently facing a tough spring, with profit margins still under intense pressure. The Welsh Government has been approached for comment.
