Farmers continue to face pressure on milk returns as weaker commodity markets create uncertainty over future prices
British dairy farmers are receiving around 7p less per litre for their milk than a year ago, despite a September price recovery, new government figures reveal.
The latest statistics Defra, published on 29 October, show the average UK farmgate milk price reached 38.45p per litre in September 2026.
This represents a 4.8% increase on August, equivalent to a rise of 1.8p per litre, but prices remain 15.6% below September 2025 levels.
The year-on-year difference highlights the financial pressure facing dairy producers, with even relatively small changes in milk prices having significant implications for farm revenues.
For a dairy business producing one million litres annually, a sustained price difference of 7p per litre would equate to approximately ÂŁ70,000 less in annual milk revenue, assuming unchanged production.
The calculation is illustrative rather than a measure of actual farm losses, with individual returns depending on milk contracts, production volumes and payment arrangements.
The figures come amid uncertainty over whether recent farmgate price improvements can be maintained, particularly as weaker dairy commodity markets continue to weigh on processor returns.
In its October market outlook, the Agriculture and Horticulture Development Board (AHDB) warned that recent price increases were not necessarily supported by stronger wholesale dairy markets.
“Increases in milk price are currently not well supported by commodity markets but are necessary to support milk production,” the levy board stated.
AHDB also expects Great Britain's milk production to fall by 2.2% during the 2026–27 milk year, citing reduced forage stocks, declining dairy cow numbers, higher production costs and disease risks.
Defra's latest statistics reinforce concerns over milk supplies, with UK production totalling 1.198 billion litres in September, down 2% compared with the same month last year.
The production decline comes after difficult summer growing conditions affected grass growth and forage availability, leaving some dairy businesses facing additional feed costs ahead of winter.
Meanwhile, recent announcements from individual milk processors have highlighted the uncertainty facing producers despite September's national price recovery.
Freshways has announced a 7p per litre reduction in its standard milk price from 1 December, taking the rate to 31p per litre and reversing much of the increase introduced during September and October.
The decision illustrates how quickly milk pricing can change, particularly where processor returns are affected by weaker commodity values and difficult market conditions.
However, Freshways' December price is not directly comparable with Defra's September national average, which reflects payments across different processors and contract arrangements.
Defra's figures also show improvements in milk composition, with average butterfat content rising to 4.41% in September, while protein content increased to 3.54%.
Both measures are important for dairy farmers whose contracts reward higher milk solids, although the financial benefit varies depending on individual payment structures.
The department's monthly farmgate price figures generally exclude retrospective bonus payments, meaning some additional income received by producers is not reflected in the reported average.
The latest figures underline the uncertainty facing British dairy farmers, with September's recovery offering some improvement while returns remain substantially below last year's levels.
With AHDB warning that weak commodity markets could limit further price increases, attention is turning to whether the recent recovery can be sustained through winter.
Defra's next milk price update, covering October 2026, is scheduled for 26 November and will provide a clearer indication of how farmgate returns and milk supplies are developing.