Business and Policy May 2025 – Milk

Milk production data

Milk production continues to soar as we approach the peak of the spring flush, which is normally around the first week in May. Recent rains have benefited grass growth and therefore milk from grass. The latest data from AHDB estimates the GB milk volume for March at 1,116 million litres, 31 mlitres more than the previous March. Daily production is currently 38.04 mlitres for the week ending 19th April, 0.7% more than the previous week and 6.3% above the same week last year (an extra 2.26 mlitres daily). For the UK, March production was 1,373 mlitres, which is 16% more than the previous month and 3.9% more than March 2024.

Farm-gate prices

The Defra farm-gate milk price for March was 46.01ppl, just 0.08ppl less than February. Processor milk prices appear to be holding steady with both Müller and First Milk announcing price holds for May and others not yet announced at the time of writing. However, south of the border, Freshways have announced a 2ppl drop from 1st May, bringing their liquid standard litre to 40ppl.

Milk Prices for Nov/Dec 2024 Scotland	Standard Ltr ppl
First Milk2	May	45.35
Müller - Müller Direct - Scotland 1, 3	May	42.25
Grahams1	Apr	40
Arla Farmers2	Apr	48.02
Lactalis / Fresh Milk Co.2	Apr	43.85
Liquid standard litre – annual av. milk price based on supplying 1m litres at 4.0% butterfat, 3.3% protein, bactoscan = 30, SCC = 200 unless stated otherwise.
Manufacturing standard litre - annual av. milk price based on supplying 1m litres at 4.2% butterfat, 3.4% protein, bactoscan = 30, SCC = 200 unless stated otherwise.
Includes 1.00ppl Müller Direct Premium. Haulage deducted depending on band for 2023 vs 2021 litres, ranging from -0.25 to -0.85ppl.

Dairy commodities & market indicators

Surprisingly, there was virtually no movement in the average wholesale prices in April for butter, cream and mild cheddar, despite rising milk volumes. Only skim milk powder was down 1%, partly due to volatility in US and EU exchange rates and buyers holding off, anticipating price drops on the back of high milk volumes. UK butter stocks are still tight, and more fat is being rerouted into cheese production, affecting cream availability and supporting prices. A greater reduction was seen in the AMPE indicator price for April, due to marginal declines in butter and SMP. This also led to a -0.24ppl drop in the Milk Market Value indicator (43.54ppl for April), which suggests the average market value of milk, based on how it is typically processed in the UK.

UK dairy commodity prices (£/tonne)	Apr	Mar	Oct
	2025	2025	2024
Butter	6,050	6,070	6,500
Skim Milk Powder (SMP)	1,980	2,010	2,090
Bulk Cream	2,625	2,624	3,096
Mild Cheddar	4,020	4.02	4,300

UK milk price equivalents (ppl)	Apr	Mar	Oct
	2025	2025	2024
AMPE	42.09	42.66	45.49
MCVE	43.9	44.06	46.6

© AHDB [2025].  All rights reserved.

Milk from grass

Recent data from AHDB’s Forage for Knowledge shows excellent grass quality with an energy content of 12.6MJ/kg DM and 20.1% crude protein. Based on a 650kg spring-calving dairy cow consuming 16kg DM from grass, this equates to almost M+24 litres from grass alone. This dry matter intake should be easily achievable at this time of year as the days get longer and where grass availability is not restricted. However, under wet conditions, dry matter intake will fall and if dry matter intake is only 14kg, then milk from grass will be M+19 litres.

Pre-cutting grass analysis

It is a good idea to test your grass one week before the target cutting day to assess free nitrates, as well as sugar and dry matter (DM). To avoid a poor fermentation, nitrates should be less than 1000mg/kg (on a fresh weight basis). While the DM and sugar content will vary depending on weather conditions and the time of day, ideally grass should be around 18% DM for cutting and sugars >15% in DM or >3% fresh. In good conditions, grass DM will increase by around 1% for each hour of wilting so be careful not to overwilt, which will increase nutrient losses. Aim for a target of 30% DM for clamp silage and higher for baling (45% DM maximum).

Scottish farm business survey results

The Scottish Government has recently published the results of the annual Farm Business Survey, which covers the accounting year from 2023-24. The survey supplies physical, economic and environmental data from around 400 farm businesses to provide insights on the state of farming to policy makers. The average dairy farm has seen a significant drop in farm business income from its highs of the previous two crop years. Average dairy farm income was estimated at £116,300, a drop of 56%. This is largely a result of the cyclical nature of the milk price, with on average a 6ppl drop between last year (45ppl) and this reporting year (39ppl). Current milk prices are 40-48ppl depending on the contact offered, and so recovery of net profit is expected in this next year’s figures.

Despite continued profitability in the sector without support payments, there are dairy farms that make a loss. This appears to be due to having significantly higher input costs than the top performing 25% of farms in the sample, with similar cow numbers and output, and similar sized farms in terms of acreage and SLR. One third of these increased costs appear to fall in the feed category and so drilling into these will provide greater insights for the sector.

Lorna MacPherson, lorna.macpherson@sac.co.uk