AUDLEM, England: A sharp fall in milk prices, driven by oversupply, is pushing UK dairy farmers toward losses, with many warning that the sector is becoming unsustainable.

Kelly and Ed Seaton, who rear 200 pedigree Holstein cows in northwest England, expect to lose money this year as the price they receive for milk drops below production costs.

Across Britain, farmers say milk production is no longer profitable, raising the risk of further exits from an industry that has already shrunk significantly. The number of dairy producers has fallen by about 20 percent since 2019 to around 7,000, according to the Agriculture and Horticulture Development Board.

Prices paid by processors have dropped by up to 15 pence per litre, or roughly 40 percent, since October 2025, as both domestic and global supply surged. Production is now outstripping processing capacity and consumer demand.

"It's simply a matter of too much milk in the market," said Kelly Seaton, whose family farm spans 175 acres on the Shropshire–Cheshire border.

Milk production has rebounded across the United States and Europe after a weak 2025. In Britain, although the milking herd stood at a decade low of 1.6 million cows in January, yields have increased. Last year's drought led farmers to rely more on concentrated feed rather than grazing, boosting output per cow.

While the UK is just under 90 percent self-sufficient in dairy, prices remain tied to global markets, leaving farmers exposed to volatility. The speed of the current downturn has caught many off guard.

Across Europe, the price slump has prompted calls for intervention. Italy has urged the European Commission to support farmers by incentivizing production cuts and subsidizing storage, though no action has been taken.

"For the past few months, we've truly seen a tsunami of milk supply worldwide," said Francois-Xavier Huard, CEO of French dairy association FNIL.

For many farmers, the economics no longer add up. Seaton said it costs about 40 pence to produce a litre of milk, but she is currently paid just 30.5 pence by a processor that turns it into Red Leicester-style cheese.

"We'll definitely make a loss this year," she said, noting that pricing is largely dictated by major processors such as Muller, Arla, and First Milk.

"We are price takers, rather than price makers - you haven't got a choice," Seaton said.

Other farmers report similar pressures. Gwyndaf Thomas, who rears 300 Friesian cows in southwest Wales, said: "We've never seen price cuts on this scale - they're savage cuts in such a short period."

Paul Tompkins, who runs a 500-cow farm in northern England, expects to lose around £600,000 this year after making profits in the previous two years.

"The question for us as an industry is how do you manage increasing price volatility going forward," he said.

Prices could fall further as spring brings a seasonal rise in production. At the same time, farmers are grappling with higher labor, energy, and fertilizer costs, compounded by the war in Iran.

Despite current challenges, long-term demand for dairy is expected to grow. Global per capita consumption of fresh dairy products is forecast to rise by 11 percent by 2033, driven by population growth and changing diets.

But industry figures warn that without improved profitability, the UK's dairy sector, worth more than £6 billion annually, could face further consolidation and reduced resilience.

"Ultimately, you become as an industry more susceptible to large corporations getting larger, fewer farmers, fewer processors, and people looking elsewhere to get product in," said independent consultant Paddy Snodgrass.

Still, Seaton remains pragmatic about the outlook. "We do just have to accept that we are going to have bad times and hope that the good times counter the bad."