A new Kite Consulting report, Decoding Dairy Disruption, reveals a profound shift reshaping the UK milk value chain. With record spring 2025 milk production coinciding with global supply constraints, farmers are finding themselves in a more advantageous position—but only temporarily. Notably, UK farmgate prices remain, on average, 2.3p per litre below European standards. Meanwhile, major processors like Arla and Müller are investing heavily in export capacity, aligning UK milk with more profitable global markets. As consumer demand shifts toward higher sustainability and welfare standards, retailers must now pay a premium to secure domestically produced milk that meets these expectations. The report underscores that the traditional buyer’s market is giving way to a seller’s one, urging all players—retailers, processors, and farmers—to recalibrate contracts, pricing models, and quality incentives.
Industry Insight:
UK dairy stakeholders are navigating a pivotal moment. With power tilting toward producers, retailers need to act now—by offering differentiated incentives and reviewing contracts—to secure high-quality milk. Processors must also adjust strategies to capture growing export opportunities, while farmers should revisit Cost of Production agreements to align with this dynamic, higher-margin market.
Source : Dairynews7x7 Sep 9th 2025 Read full story here