The dairy sector has warned of a 'tough winter ahead' as the gap between farmgate milk and retail prices, as well as high input costs, continues to add significant financial pressure.
Government figures show the average UK gate price for milk was 36.48 pence per litre in June, down 16% in 2022, on the same month last year.
However, the current cost of production is estimated to be between 40 pence per litre and 45ppl.
The Royal Association of British Dairy Farmers (RABDF) warned that this was unsustainable for many producers.
The body said farmers were "caught in the crossfire, with little let up for farmers forecast in the short-medium term".
“The difference between the farmgate milk price and retail price is currently a very live issue on farm for our members," said RABDF chairman, Di Wastenage.
"Our dairy farmers are facing enormous financial pressures. Farm input costs are stubbornly high and high retail prices impact consumer demand too."
She added: “We recognise UK processors also continue to face high energy and labour costs, which are reflected in these results.
"The key difference in the current retail price of cheese is because it is manufactured using higher cost milk from earlier in the year.”
Looking to the next six months, the global markets will offer little positivity for dairy farmers in the UK.
The downturn in demand for whole milk powder (WMP) from China and the forward forecasting from Fonterra suggest more difficulties ahead.
RABDF warned that, for many farmers across the UK, this may be financially unsustainable for their businesses.
Ms Wastenage added: “The UK needs a dairy industry from the farmgate to the supermarket shelf to operate efficiently and profitably for all sectors along the supply chain.
"We must ensure this happens and that the value is shared with all parties.”
