Dairy production set to rise in 2025 in UK

The first half of the 2024/25 milk year saw sluggish growth, with wet weather in spring and lower prices leading to reduced yields. However, things started to turn around in September as prices climbed and margins improved.

Favourable weather allowed cows to stay out in the fields longer, contributing to a resurgence in milk flows. By November and December, milk deliveries saw notable increases, with volumes up by 4.5% and 3.3%, respectively.

Susie Stannard, AHDB Senior Analyst (Dairy) said:

"After a tough start to the season, the industry is showing signs of recovery. Higher milk prices and a stronger milk-to-feed ratio are encouraging farmers to boost production.

"We're seeing solid growth, but we must also be mindful of global risks, from fluctuating commodity prices to disease outbreaks, which could disrupt this upward trajectory."

While milk prices are set to remain high in the short term, with an average of 45.14ppl recorded in October 2024 (excluding aligned contracts), prices may start to decrease towards the back half of 2025.

Increased production could put downward pressure on prices during the spring flush, as milk supplies surge just as consumer demand starts to level out.

Retail milk demand is expected to remain stable, but volume per household could decline slightly as more workers return to office settings, reducing their in-home consumption.

Cheese demand will continue to rise, supported by promotions and the popularity of home-cooked meals.

Butter consumption may decrease due to price competition with plant-based alternatives, while yogurt sales are expected to grow, driven by health trends.

Susie added:

"The dairy sector has demonstrated resilience in the face of significant challenges. However, the industry's ability to navigate these uncertainties will depend on how well it can balance production increases with fluctuating demand and external pressures."

With key issues like disease control, policy changes, and global supply chain dynamics in play, the year ahead promises to be one of cautious optimism for the UK dairy industry.

The outlook for 2025 suggests that while growth is likely, dairy producers will need to stay resilient to adapt to changing market conditions.

Source : Dairynews7x7 Feb 21st 2025 AHDB