NFU Cymru warns £100m loss to rural economy as dairy downturn bites
Welsh dairy farmers have seen milk prices fall by up to 15p per litre since the autumn, prompting NFU Cymru to press ministers for urgent action to safeguard the sector’s future.
The union estimates that between October 2025 and March 2026, a conservative £100 million will have been lost from the Welsh rural economy as farmgate prices tumble.
NFU Cymru met Deputy First Minister Huw Irranca-Davies MS this week to present eight key actions it believes the Welsh government should take to support farm incomes and reduce production costs during the current downturn.
While longer-term prospects for dairy remain positive, driven by growing global demand for protein, the short-term outlook is far more challenging.
Oversupply in Wales and beyond has pushed down wholesale prices for cream, butter, cheddar and powders, feeding through into a sharp and rapid drop in milk prices on farm.
The Welsh sector is particularly exposed because most of the milk processed within Wales is turned into cheese — one of the commodities hardest hit by falling wholesale values.
NFU Cymru President Abi Reader said: “This is an extremely difficult period for Wales’ dairy sector, with most farms in Wales receiving a price well below the cost of producing milk.”
She warned that the rapid reduction in price is restricting cash flow, delaying investment decisions and threatening business survival.
“With March price announcements already being made, in the six months from October 25 – March 26 we will have seen a conservative estimate of £100m lost from the Welsh rural economy,” she added.
Among the union’s proposals are reforms to the Sustainable Farming Scheme to ensure it is workable for dairy farms, an independent review of the cumulative regulatory burden on farm businesses, a comprehensive bovine TB eradication strategy, and close cooperation with the Agricultural Supply Chain Adjudicator to ensure the Fair Dealings Obligations (Milk) Regulations 2024 are properly applied.
Ms Reader said the Sustainable Farming Scheme should evolve in a way that avoids duplication with farm assurance requirements and supports productivity, underpinned by a budget that matches the scale of ambition.
She also called for an independent review into the impact of regulations and planning frameworks on farmers, singling out the Control of Agricultural Pollution Regulations (NVZs) as “a blunt, inefficient and overly bureaucratic” system imposing high costs.
Many dairy farmers, she said, are being required to invest hundreds of thousands of pounds in compliance at a time when cash flow is already under severe pressure.
Bovine TB remains another major challenge, with almost one in five Welsh dairy farms operating under TB restrictions in 2025.
“It continues to inflict financial and emotional stress, limiting profitability and strangling investment,” Ms Reader said, urging ministers to implement a comprehensive eradication strategy.
She added that fair and transparent markets are essential during downturns, calling on government to ensure milk regulations are implemented “in the spirit they were intended”.
With further milk price announcements expected in March, many Welsh dairy businesses now face a difficult spring as margins remain under intense pressure. The Welsh government has been approached for comment.
