The sudden and sharp downturn in price can be attributed to an oversupply in milk, both in Wales and further afield, which has put pressure on global commodity markets and domestic processing capacity. Whilst there are some early signs of positivity returning to wholesale markets this will take time to feed through to farmgate price and most dairy farms in Wales continue to receive a price well below the cost of producing milk. The is the first time a significant drop in milk prices has happened under the oversight of the new Defra appointed Agricultural Supply Chain Adjudicator (ASCA) who oversees compliance with the new dairy contract regulations – the so-called Fair Dealing (Milk) Regulations or FDOM.
The regulations were never aimed at setting the market price or preventing fluctuations in price, only the market should do that. However, the regulations should increase transparency, trust and accountability across the supply chain. Producers should know what factors influence their milk price and be able to anticipate how the price will move. In addition, the regulations set out many other provisions aimed at delivering fairer relationships including how any variations to contracts should be agreed. This market downturn is therefore the first real “test” of the FDOM regulations and how milk buyers are complying with them.
NFU Cymru believes that it is vital for the marketplace to operate fairly, transparently and producers should not be left shoulder the risk, something which is particularly crucial at times of market downturn. We lobbied alongside colleagues from the UK Farming Unions – NFU, UFU and NFUS – for these regulations and they represent an important step forward in delivering a fairer and more resilient dairy supply chain. It is therefore vital that they are implemented and applied in the spirit they were intended.
The survey opened by the Adjudicator aims to build on their existing understanding of how the UK milk sector is operating and they are inviting everyone from across the sector to share their views.
The survey asks about the regulations, the role of the adjudicator, and how relationships between producers and milk purchasers have worked during this challenging period. It aims to gather evidence on what is working well, with a view to highlighting best practise. The adjudicator also wants to understand where things aren’t working so well and where bad practise may have crept back in, hence highlighting areas where the regulations may need further support or attention.
The survey closes on Monday 20th April and takes about 10 minutes to complete. NFU Cymru would encourage all dairy farmers to complete the survey to make your voice heard on this important issue.
The survey can be accessed via the Defra website: https://defrafarming.blog.gov.uk/2026/03/26/a-survey-for-the-milk-sector/