Over recent months, there has been significant pressure on global dairy markets meaning we have seen the farmgate price of milk fall steeply for UK dairy farmers.
What is the current state of the UK dairy sector?
The UK dairy sector is currently facing challenging conditions.
The recent downturn in milk prices can be attributed to a significant oversupply globally, which has put pressure on global commodity markets and domestic processing capacity.
While there have been some signs of improvement in wholesale markets, the drop seen in milk prices, coupled with production costs remaining high, is putting farmers under considerable pressure.
A recent NFU survey also indicates that business confidence is low across the sector.
What is happening with milk contracts?
The NFU understands that a number of dairy farmers, across several milk pools, may have recently received notice to end their supply contracts.
Muller appears to be the latest processor to issue a number of farmers, producing roughly 1% of their current volumes, with 12 months’ notice to bring their supply contracts to an end.
Why are some dairy farmers being given notice now?
The decision made by certain milk processors to end supply contracts is, in some cases, likely to be due to the challenging global market pressures faced by the dairy sector in recent months.
It is reported that Muller, for instance, has taken the decision to serve notice on some producers in part due to an ongoing rationalisation of the business, an oversupply of milk or due to seasonal calving patterns creating an unbalanced milk supply.
The NFU is also aware that, in some instances, market conditions may have lowered demand for certain milk pools.
What should producers do if they receive notice to end their supply contract?
Each situation will turn on its own facts and circumstances, and we would encourage any NFU member who is concerned about their position and /or has received notice to end their supply contract to seek independent legal advice at an early stage. This will help them to understand their position and the options available to them.
Under the new Fair Dealing (Milk) Regulations 2024 (the Fair Dealing Regulations), dairy farmers receiving a no-fault termination must be given at least 12 months' notice. If producers are given a shorter notice period and the reason is unclear, we would encourage them to contact the Supply Chain Adjudicator or contact NFU CallFirst for initial guidance and support. We have provided further details about the support available through NFU CallFirst below.
How are termination notices under the Fair Dealing Regulations working in practice?
The Fair Dealing Regulations were not designed to set market prices or prevent price fluctuations. However, they are intended to improve transparency, trust and accountability across the supply chain. Producers should have a clearer understanding of the factors influencing their milk price and be better placed to anticipate how prices may change over time. In addition, the regulations include provisions aimed at supporting fairer contractual relationships, including how any variations to contracts should be agreed upon.
Where producers receive no less than 12 months’ notice of any no-fault termination, milk buyers are likely to be complying with that aspect of the regulations. However, independent legal advice should be obtained, eg, to consider whether a specific contract complies with the regulations and/or whether any notice served is valid.
How might the current survey of the dairy sector by the Agriculture Supply Chain Adjudicator help?
It is encouraging for UK dairy farmers that the Adjudicator is taking an active role in investigating non-compliance in the sector and addressing potential issues across the dairy supply chain.
The survey asks about the Fair Dealing Regulations, the role of the Adjudicator, and how relationships between producers and milk purchasers have operated during this challenging period. It aims to gather evidence on what is working well, with a view to identifying examples of best practice.
It will also allow the Adjudicator to gather evidence of areas where practice may be less effective, to help inform whether the regulations may need to be reviewed or strengthened in the future.
Effective enforcement of the regulations is an important step in supporting transparency and confidence in contractual arrangements between dairy farmers and their milk buyers. We encourage dairy farmers to take part in this survey to help provide insight into current market practices and compliance, and to support a better understanding of how the regulations are working in practice.
What is the likely outlook for the future of the UK dairy sector?
The long-term demand for dairy in the UK and globally is expected by market analysts to continue to rise. Some global market analysts suggest that demand for dairy globally may outstrip supply by 2035, with a significant rise in demand expected to come from Asian and North African markets.
Around 98% of households in the UK regularly purchase or consume dairy products, while the total value of UK dairy exports in 2025 was £2.2 billion – up 16.6% on the year. Ongoing, trusted and, long-term, stable relationships between producers and their milk buyers are vital to support a resilient supply of dairy products and to give producers the confidence to contribute to future UK food security.
Where can producers and NFU members go for further help?
Support for NFU members
Initial advice through NFU CallFirst
The Legal and Technical Advisers at NFU CallFirst provide free initial legal advice and guidance to NFU members and may be able to assist members with potential contractual issues.
NFU CallFirst can be contacted on 0370 845 8458.
Independent legal advice and NFU Panel firms
If you have any questions about your particular situation, you may wish to take independent legal advice. A solicitor will be able to discuss the terms of your contract, consider how best to approach your supplier and advise on key issues such as any notices served.
The NFU’s legal panel firms of solicitors have been selected because of their agricultural expertise.
NFU Farmer & Grower members receive a 12.5% discount on the hourly rates of the legal panel firms for work relating to their farming businesses and will be able to advise on issues of this nature.
Details of your local panel firm can be found on our NFU Legal Panel page, or referrals can be arranged through NFU CallFirst.
NFU Legal Assistance Scheme
If you subscribe to the NFU’s LAS (Legal Assistance Scheme), you may be eligible for a contribution towards the professional fees you incur in resolving a dispute relating to your contract.
For more information about the LAS, and to find out whether you are a subscriber, contact NFU CallFirst on 0370 845 8458.
