Milk supply from UK and Ireland pushes down milk prices

Milk production in the United Kingdom reached 1,33 billion liters in January, a 4,1% increase year-on-year. This represents continued growth, although the rate of increase is slowing. In October, growth was still around 7% year-on-year, after which the increase in milk supply gradually declined.

Higher milk contents support production growth. The fat content rose to 4,45% (+0,05 percentage points) and the protein content to 3,53% (+0,11 percentage points). As a result, milk solids production increased by 6,2% year-on-year, faster than the growth in milk volume itself. Here too, growth has weakened slightly in recent months.

Although production increases at the beginning of the year, January traditionally remains a month with relatively low volumes. Grass growth in the United Kingdom is typically limited during winter. According to AHDB, average grass growth at the end of February was around 6,22 kg dry matter per hectare. This increases rapidly towards spring, peaking in May when grass growth averages 78,8 kg dry matter per hectare (2019–2024 average).

Milk price clearly lower
Rising milk production has clearly put pressure on milk prices over the past year. The farm-gate milk price averaged 37,75 pence per liter in January, a decrease of 5,2% compared to the previous month and 17,8% lower than a year earlier.

This marks a clear turnaround compared to early 2025, when milk prices were still rising sharply. Since October, the annual price trend has been negative, and the decline is accelerating. The current price drop is the sharpest in more than two years.

Lower feed prices do offer some relief. In December, the feed price averaged £291 per tonne, a 4,2% year-on-year decrease. This partially offsets the lower milk price, but margins on dairy farms remain under pressure. Market signals therefore suggest that dairy farmers remain cautious about further production growth.

Ireland's production picks up again
In Ireland, milk production in January reached 174.430 tons. This is 34,8% lower than in December, but 4,2% higher than a year earlier. This represents a rebound in production after a 3% year-on-year decline was reported in December.

In Ireland too, production is traditionally low in January, but figures indicate that milk production will pick up again in early 2026.

Milk solids content was lower than in December, but still higher than a year earlier. The fat content was 4,63% (+0,12 percentage points) and the protein content was 3,65% (+0,07 percentage points). As a result, milk solids production increased by 6,7% year-on-year to 14.440 tons.

Irish milk price below cost price
In Ireland, too, the ample milk supply has been putting pressure on milk prices for months. In January, the decline seemed to stabilize. Most dairy cooperatives kept their payout prices unchanged that month, providing some relief for dairy farmers.

However, the basic milk price is still more than 15 cents per liter lower than a year earlier, around 35 cents per liter in January. This is a sharp drop from 48 cents per liter in June of last year, just before prices began to fall rapidly.

According to Agriland, production costs are now above 37 cents per liter. This means that many dairy farmers are producing milk below cost price based on the basic milk price. In early spring, farms therefore often rely on strong calf sales to maintain cash flow.

The continued margin pressure could impact milk volume if dairy farmers decide to limit production to control costs.