Dairy

October 2026

• British milk production continues to fall, reflecting the effects of the summer heatwave and prolonged drought conditions. AHDB reports production between April and July was 2% lower than the same time last year. Supplies are forecast to reduce further, as farmers face pressure from high input costs and the impacts of bluetongue virus.

• Farmgate milk prices remained relatively unchanged over the summer and have not increased as quickly as hoped. Concerns have been raised that Scottish dairy farmers supplying Müller's Skelmersdale contract are receiving milk prices below the cost of production, placing continued pressure on farm profitability.

• However, several milk processors announced increases in recent months, with Arla offering a 1.76p/litre increase to its suppliers in October, which takes its average price to 39.17p/litre.

• Dairy replacement heifer values remain strong, at over £3,000 a head, supported by strengthening milk prices and limited availability. According to the AHDB, dairy heifers accounted for just 32% of calves registered to dairy dams last year. Increasing use of beef sires may see a tightened supply of replacement heifers in upcoming years, with the British milking herd in April 2026 already down 2% on the previous year.

• Cull cow trade has weakened recently, with a 40-50p/kg reduction in base price over the last five weeks. This decline is largely thought to be driven by reduced consumer spending and increased supply in EU markets as farmers responded to the dry summer and reduced forage availability.

View full Food & Farming update here