In the rolling hills of Great Britain, dairy farmers are producing more milk than ever, but the story is not one of simple success. Beneath record deliveries and stable prices lies a sector grappling with shrinking herds, fragile exports, and unpredictable global trade.
Rising output, shrinking herds
Milk deliveries surged by 5% in the second quarter of 2025, with April through June each posting around 6% growth. Forecasts now point to a record 12.83 billion litres for the 2025/26 season, up 3.1% from last year. Organic production is thriving too, rising 12.6% thanks to stronger UK demand and tighter European supplies.
Yet, the national milking herd has dropped to 1.62 million head, the lowest April figure on record. The decline in youngstock, worsened by Bluetongue virus restrictions from the EU and a shift toward beef semen use, casts doubt on future supply.
Farms consolidate, strategies shift
The number of dairy producers continues to fall, down 2.6% to 7,040. Larger farms are producing more, with the average output reaching 1.77 million litres annually. Nearly one in five farms now rely on block calving, signaling a move toward more structured production cycles.
A global balancing act
While UK production is up, global dynamics remain mixed. Worldwide output grew by just 0.7% in April, led by the US, New Zealand, and Argentina, but EU production fell 1.6%, especially in Germany, Belgium, and Italy. This European shortage has helped keep UK prices firm, with farmgate prices steady at 43.1ppl. Cream and butter remain strong, while cheddar holds near historic highs.
Consumer demand evolves
Despite total cow’s dairy volumes slipping 1.1%, consumer spending rose 3.5% amid higher prices. Whole milk and cheddar are growing, block butter is gaining traction, and high-protein products like cottage cheese are increasingly popular. Meanwhile, plant-based and processed cheese sales are sliding.
Trade headwinds ahead
Exports are recovering after a weak start to the year, with non-EU sales of powders, whey, and butter showing momentum. However, cheese and liquid milk exports continue to fall. The introduction of new US tariffs adds further uncertainty, underlining the need for the UK dairy industry to diversify its markets.
The long-term view
Banks and advisers stress resilience over short-term gains. NatWest Agriculture, which has supported farmers for over three centuries, highlights sustainability, innovation, and risk management as the keys to securing the sector’s future. The challenge is clear: balancing today’s production boom with tomorrow’s uncertainties.
