UK dairy market in turmoil as spot prices for milk fall to just 15p/litre

The restrictions introduced to halt the spread of the COVID-19 virus are having a disastrous impact on the UK’s dairy market, particularly the shutdown of the food service market.

Spot prices for UK milk have plunged to just 15p/litre, with as much as 12m litres of surplus milk washing around the UK this week alone that nobody wants.

The situation in the UK dairy market has deteriorated rapidly in the last week and many UK dairy farmers are now facing the prospect of having to dump milk.

Unlike Ireland, the UK dairy market is predominantly based on the production of liquid milk and fresh dairy products for the huge UK consumer market.

Initial surge in demand

But after an initial surge in demand as UK consumers stockpiled food, footfall at supermarkets has fallen back to more normal levels and dairy processors are now left with huge volumes of milk and other fresh dairy products that would normally be sold into food service channels such as restaurants, cafés, schools, offices and work canteens.

The collapse of the food service channel has left an estimated 12m litres of surplus milk produced in the UK this week that may not find a home.

In Scotland, Grahams Dairy told its suppliers this week that it had been forced to skim and dispose of milk at two of its processing sites because it had no market for the milk.

The family-run company has closed two of its processing sites due to the loss of food service markets and has cut its milk price to 24.5p/litre (27.8c/litre).