English Dairy Farms See Earnings Surge in 2024/25

Milk prices rebound sparks £105k income surge for UK dairy farms – but labor shortages and DEFRA cuts threaten the fragile recovery.

EXECUTIVE SUMMARY: English dairy farmers are celebrating a financial rebound with average incomes doubling to £176k in 2024/25, fueled by 12% higher milk prices and easing feed costs. However, the sector faces mounting challenges: labor shortages now affect 56% of farms, Brexit-era subsidy cuts slash payments by 76%, and bluetongue virus threatens herd health. While innovative farmers like Wiltshire’s Peter Gantlett thrive through organic transitions and robotics, others face contract terminations and consolidation pressures. Despite stable herd numbers and creative cost-cutting strategies, the industry remains cautiously optimistic, balancing newfound profitability against long-term uncertainties in policy and climate.

KEY TAKEAWAYS:

• Income Leap: Average earnings surged £105k year-on-year to £176k – still 22% below pre-2023 peaks
• Price Recovery: Farmgate milk prices hit 46p/L (+12%), with organic fetching 56p/L premiums
• Cost Relief: Input expenses dropped 2% after 44% inflation since 2019, easing pressure on margins
• Labor Crisis: 1 in 10 farms downsized herds due to worker shortages; wages up 27% since 2019
• Innovation Gap: Tech adoption splits sector – robotic milkers boost efficiency, but 16% of farmers eye exit strategies

After years of watching their bank accounts drain faster than a leaky milk tank, English dairy farmers finally see some daylight. Fresh Defra figures show dairy operations have more than doubled their income – jumping from a measly £70,900 last year to a much healthier £176,000 for the 2024/25 season. That’s a whopping £105,000 boost to the bottom line that’s got farmers cautiously eyeing equipment upgrades they’ve been putting off for years.

But let’s not kid ourselves – this isn’t some golden age of dairy farming returning. These earnings still fall short of the £225,000 farmers pocketed just two years ago. It’s like climbing halfway back up after falling down a slippery slope.

THE CASH FLOW COMEBACK

From Red to Black (Finally)

If you’ve been in the milking parlor at 5 AM wondering why you didn’t just become an accountant, last year’s numbers probably had you questioning your life choices. The 2023/24 season was brutal – incomes plummeted by a staggering 78%, leaving many operations barely treading water with just £70,900 to show for all those early mornings and late nights.

“We’re an endangered species; our numbers are dwindling,” says Peter Gantlett, a 69-year-old Wiltshire dairy farmer who knows the struggle well. Like many, he’s watched one British dairy farm go out of business every day, with the total number of UK producers shrinking to just 7,270 as of October 2024 – down a shocking 44% from a decade ago.

Milk Checks That Don’t Bounce

The recovery’s secret sauce? Milk prices finally make sense again. The farmgate price jumped about 12% between March 2024 and January 2025 compared to the previous year. That extra money in the milk check, combined with tight supplies early in the year, has boosted milk output by 12%.

For context, the average UK milk price is hovering around 46 pence per liter as of January 2025, with organic producers like Gantlett fetching a premium at 56 pence. Major processors have been holding steady with these improved rates – Arla keeping conventional milk at 48.27 pence per liter and organic at 58.26 pence for March 2025, while Muller maintains its Advantage scheme at 42.25 pence.

Remember when milk prices were so low you’d have been better off watering the garden with it? Those days seem to be behind us – at least for now.

BATTLING THE COST MONSTER

Feed Bills That Don’t Make You Wince

Anyone buying straws these days knows the pain – costs keep soaring higher. But there’s finally some relief as input costs dropped around 2% this year. That milk check now stretches like fresh mozzarella – finally covering feed bills with room to spare.

Feed and fertilizer costs have eased, giving farmers a much-needed breather after years of watching input prices skyrocket. Since 2019, farm input costs have ballooned by 44%, with straw prices more than doubling and everything from electricity to animal feed jumping 38-50%.

Over at Greenbank Farm near Preston, third-gen dairyman James Haworth juggles TB testing on his 80 Holsteins while DEFRA’s delinked payments vanish faster than milk in a barn cat’s bowl. Trying to navigate DEFRA’s payment scheme feels like herding unweaned calves – just when you think you’ve got ’em corralled, another break for the fence.

Labor Headaches Getting Worse

While milk prices and feed costs give farmers some breathing room, finding good help is becoming a nightmare. Lancashire’s small herds are feeling the squeeze – think of Old Tom’s 80-cow setup battling TB testing costs while DEFRA rewrites the rulebook and he can’t find reliable milkers.

Arla’s recent survey of 472 dairy producers paints a grim picture: 56% say recruiting workers is more complex than five years ago. The labor shortage is forcing tough decisions – 1 in 12 farmers are cutting production (up from 1 in 18 last year), and 1 in 10 have reduced herd size because they can’t find help.

When they find workers, they pay through the nose – wages are up 27% compared to 2019. No wonder 16% of farmers are considering leaving dairy altogether, up from 12% just last year.

POLICY PAINS & MARKET REALITIES

Government Giveth, Government Taketh Away

The financial recovery is happening despite, not because of, government support. The Basic Payment Scheme fell by nearly 25% year-on-year as Brexit continues reshaping UK agriculture. By 2025, payments will be slashed by 76% compared to 2020, with complete elimination by 2028.

“We are an endangered species,” Gantlett remarks, his weathered face showing the strain of navigating these changes. His farm remains profitable thanks to the shift to organic, but many smaller operations aren’t so lucky. Recent changes to inheritance tax have further dampened farmer confidence, adding another layer of uncertainty to an already precarious business.

Dairy Farmers: Still Top of the Farm Food Chain

Despite all the challenges, dairy farmers remain the highest earners in English agriculture. Their £176,000 average income towers over specialist pig farmers (£155,000), general croppers (£108,000), and especially cereal farmers, who scraped by with just £27,000 – barely a thousand pounds more than livestock graziers.

The English dairy herd has remained surprisingly stable at around 1.08 million cows since 2021, even as the total cattle population dipped 2% year-on-year due to beef herd declines. This stability in dairy numbers suggests farmers are finding ways to produce more milk with the same number of cows – efficiency born of necessity.

THE ROAD AHEAD

The milk-to-feed price ratio has moved into what industry wonks call the “expansion zone,” which typically encourages increased production. However, the threat of the bluetongue virus and ongoing herd size declines could limit growth.

The stakes couldn’t be higher for farmers like Gantlett, who invested £120,000 in each of his two Lely robotic milking machines back in 2011 (plus similar costs for building work). “We strive for maximum efficiency,” he says. “Two decades ago, we faced a pivotal choice: exit the business, expand, or enhance the value of our products. We opted for the latter and transitioned to organic farming.”

Others haven’t been so fortunate. Saputo Dairy UK recently terminated contracts with 13 farmers in the South West, affecting 20 million liters of annual milk production – enough to fill eight Olympic-sized swimming pools. These farmers have 12 months to find new buyers or face potential financial ruin.

While checking his pregnant heifers on a foggy March morning, one dairy farmer said: “We’re not out of the woods yet, but at least we can see some daylight through the trees.” For an industry that’s weathered so many storms, that glimpse of sunshine might just be enough to keep going for another season.

After all, the British public still consumes about 12 million liters of milk daily – more than a liter per person weekly. As long as people keep putting milk in their tea and cheese on their sandwiches, there’s hope for the dairy farmers who get up before dawn to make it happen.

TECH TO THE RESCUE?

Swap out that pricey alfalfa mix – Wilkinson’s Dairy in Cheshire saved £12k/year by teaming up with a neighbor brewer for spent grain feed (47% protein boost!). It’s just one example of farmers getting creative to stay afloat.

The UK Dairy Carbon Network project, launched in February 2025, aims to establish a network of 56 dairy farms across four major dairying regions to test and assess various mitigation approaches for reducing greenhouse gas emissions. This initiative, led by the Agri-Food and Biosciences Institute (AFBI) and funded by Defra, brings together farmers, industry experts, scientists, and policymakers to deploy and measure the impact of potential solutions.

Technology is reshaping the dairy landscape from robotic milkers to facial recognition for cows. Some farms use computer systems that recognize individual cows by their spot patterns, width between the eyes, and even nose prints. These systems help monitor health and milk production and streamline the milking process.

Smartphone apps are also making their way into the dairy farmer’s toolkit. These apps can help manage schedules, track production, and even monitor cow health. It’s a digital revolution in the pasture, with farmers embracing the power of data to boost efficiency and animal welfare.

The dairy industry faces challenges and opportunities as we look to the future. Climate change, shifting consumer preferences, and evolving regulations will continue to shape the landscape. But with innovation, resilience, and a bit of that famous farmer grit, the UK dairy sector is determined to survive and thrive in the years ahead.

Read more:

• UK Milk Prices Surge to 43p/litre
• Revolutionizing Dairy Farming: How AI, Robotics, and Blockchain are Shaping the Future of Agriculture in 2025
• Discover the Future of Dairy Farming: Key Technologies Revolutionizing the Industry

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