Dairy farmers are operating at a loss despite a rise in farmgate milk prices, with industry representatives warning that tight profit margins are still squeezing producers as winter approaches, sources reported.
Production Costs Exceed Milk Prices for Farmers
- Production costs for Dyfrig Griffiths have climbed to 40p per litre, while he receives 39p per litre, according to industry figures.
- Consumer prices for four pints of whole milk have risen by just over 50% since 2018, reaching an average of £1.66 according to Office for National Statistics data.
- Farming unions have urged the Welsh government to implement a clear long-term strategy to protect the dairy sector, which is valued at £929m to the economy.
Rising Farmgate Prices Fail to Cover Production Costs
Dyfrig Griffiths, the vice-president of the Welsh Dairy Show who farms in Llangoedmor near Cardigan, stated that producers are operating at a loss despite receiving recent price adjustments. A farmgate price represents the amount a farmer receives for milk before transportation, processing, packaging, and retail markups are applied.
Griffiths receives 39p per litre for his milk, but production costs currently stand at 40p per litre. Over the past year, his milk price dropped to 30p a litre while his production costs were 38p a litre, resulting in continuous losses of 8p per litre.
“In milk cheque terms, every penny would be £4,000 a month. So we’ve made huge losses up until now,” Griffiths said, adding that no farm can operate profitably at 30p a litre regardless of size or operational system.
Although Griffiths received an increase of 3p per litre in September and an additional 6p in October, these adjustments failed to establish a profit margin. Rising expenses for fuel and fertiliser have driven overall production costs above 40p per litre. He noted that the recent price recovery occurred because a summer drought caused national milk production to drop, bringing supply back into balance with demand.
Impact on Supply Chains and Consumer Spending
While farmgate pressures mount, retail prices for consumers have steadily increased over the years. According to the latest figures from the Office for National Statistics, four pints of whole milk cost an average of £1.66, compared to £1.10 in 2018.
Shoppers in Cardigan and surrounding areas reported that the higher prices have not altered their purchasing habits. Christine Lillywhite of Cardigan, who uses about six pints of milk a week, stated that the cost does not influence her consumption for tea, coffee, or cooking. Hugh Bevan from Dinas Cross in Pembrokeshire, who consumes roughly three pints weekly, noted that he rarely checks the price of household goods.
Enfys Wyse, a 57-year-old tearoom owner in Cenarth, Ceredigion, observed that her weekly milk expenditures have risen by £35 over the past decade. During peak summer operations, her business uses 10 to 12 two-litre bottles daily, dropping to five or six bottles in the winter. Wyse remarked that the price increase over the years had been lower than anticipated.
Institutional Calls for Long-Term Strategy
With winter approaching—traditionally the most expensive period for farm operations—NFU Cymru highlighted renewed concerns regarding shrinking margins. The union is encouraging the Welsh government to provide stability for a sector valued at £929m to the economy.
Farmers Union Wales echoed the need for intervention, asserting that a clear long-term strategy is required to help the Welsh dairy industry withstand volatility in milk prices and input costs.
In response to these industry concerns, the Welsh government stated that it recognizes the specific pressures facing dairy producers, which are primarily driven by global oversupply. Officials emphasized their commitment to the sector through agricultural schemes designed to enhance financial and environmental performance. The government added that its £1bn funding commitment provides certainty alongside the Sustainable Farming Scheme, which remains accessible to all farmers.
| Metric | Historical Data (2018) | Current Data |
|---|---|---|
| Average Consumer Price (4 pints) | £1.10 | £1.66 |
| Farmgate Price (Dyfrig Griffiths) | Not Reported | 39p per litre |
| Production Cost (Dyfrig Griffiths) | Not Reported | 40p per litre |
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
