British dairy production is forecast to grow by 1.1% in 2025, according to the latest report from the Agriculture and Horticulture Development Board (AHDB).
The first half of the 2024/2025 dairy 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 and dairy production.
By November and December, milk deliveries saw notable increases, with volumes up by 4.5% and 3.3%, respectively.
Senior dairy analyst at the AHDB, Susie Stannard 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,” she added.
Dairy production
Milk prices are set to remain high in the short-term, with an average price of 45.14p/L recorded in October 2024, excluding aligned contracts.
However, 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.
The report indicates that 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.
“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,” Stannard concluded.
