Dairy Matters:

Q - Why have we have seen a downward shift in milk prices recently?

"After a relatively stable period, for most, some dairy producers are once again facing into steep price cuts as processors announce negative price adjustments, pointing to high domestic milk deliveries, an uptick in volumes globally and a drop in commodity prices, with bulk cream prices taking a dive in recent weeks.

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"This has, understandably, created concern among dairy producers, many of whom are coming out of a tough, dry summer which led to more feed being brought in, facing tough decisions around the proposed family farm tax and looking at significant investment needs linked to the cost of regulatory compliance.

"Following , it is clearer than ever that staying informed about market trends and understanding their impact on your milk pool is now essential practice for all UK dairy farmers."

Q - What about the new Fair Dealings Regulations? How can they support farmers in times of market volatility and declining milk prices?

"The Fair Dealings Obligations Milk [FDOM] regulations, in force since July 2025, aim to make farm gate milk prices more transparent. While the regulations do not set milk prices, which remain market-led, the NFU succeeded in advocating for three key clauses focused around improving price transparency, reducing exploitive practices, and recognising the role of dairy producer organisations).

Global

"Market volatility truly tests the resilience of the dairy sector. Global commodity prices are beyond local control and often put pressure on supply chains, and present challenges for the farming sector.

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"The regulations were never aimed at setting the market price or preventing fluctuations in price. What we do expect them to achieve however, is an increase in transparency, trust and accountability across the supply chain. Producers should know what factors influence their milk price and be able to anticipate how the price will move, placing farmers in a stronger position than during previous periods of market volatility.

"Under the new regulations, dairy farmers can challenge their milk processor to justify any milk price adjustment and ask them to demonstrate how it aligns with the factors signed up to in their milk purchase agreement. If this cannot be done satisfactorily, producers can raise the issue with the new agricultural supply chain adjudicator."

Q - There is a significant range in milk price drops for November, ranging from -8ppl to -1.25ppl. How can this range be justified and how does it align with the new regulations?

"Processors operate in different markets and will have different levels of exposure to global fluctuations in price.

"Under FDOM regulations, all milk contracts must clearly explain the pricing factors milk buyers use to calculate milk prices.听 The transparency required under the new regulations should enable farmers to understand how their milk price is determined and therefore which market indicators to use for forecasting.

Pricing mechanisms

"As market conditions fluctuate, this clarity becomes even more important. If a contract lacks clear pricing mechanisms, farmers should discuss this with their milk buyer or milk pool representative to ensure they understand how their milk prices are set.

"If the contract does not include the required information and this cannot be resolved with the buyer, the regulations provide a mechanism to ensure these issues can be raised with the new agricultural supply chain adjudicator.

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"Additionally, any changes to the milk pricing mechanism used to generate farmgate prices require prior agreement from the farmer or, where relevant, their dairy producer organisation."

Q - What is the NFU doing to support dairy farmer members impacted by significant price drops?

"We encourage all producers to continue to raise questions and engage in constructive dialogue with their buyer on how their milk price is formulated. If a member feels unable to do so, they also have the option of discretely raising a concern via the NFU's Call First Service - 0370 845 8458 - or the office of the adjudicator remains for any farmer concerned about a lack of transparency or engagement from their milk buyer. The NFU also offers a discounted contract-checking service to members.

"The NFU will continue to monitor the impact of the new regulations, working closely with producers, producer representatives and dairy producer organisations to ensure all UK dairy producers receive fair and transparent contracts.

Adjudicator

"We will also continue to raise any issues or potential incidences of non-compliance with the new adjudicator. Where we feel the new fair dealing regulations do not go far enough, or are not preventing further incidents of unfair behaviour, we will be tracking these and including them in our response to the Government's review of the regulations which must take place within five years of the regulations coming into force.

"It is important to note that the adjudicator can only officially investigate complaints made by farmers, so it is essential that producers engage fully with the new regulations and proactively make use of the dispute resolution process set out in their contracts."