There are now fewer than 7,000 dairy farmers in Britain for the first time, down from 8,720 in October 2019.

However, the decline in dairy farmers does not equate to a decline in dairying: a different set of AHDB figures show milk production is at record levels, up 5% year-on-year. More milk is being produced by fewer farmers and fewer cows.

Milk production is a far more complex business than most shoppers realise. When thinking about the dairy industry, we tend to picture the herds glimpsed from a car window: cows milked by a farmer, the milk collected by a processor, bottled, and sent to the supermarket.

In reality, dairy sits at the centre of a vast and intricate supply chain. The milk in your fridge is only one part of the story. It also feeds the production of cheese, yogurt and butter, supplies a hospitality sector that depends on everything from cappuccinos to soft-serve ice cream, and underpins a global trade in milk powder worth billions of pounds.

I was Head of Farming Sectors at Defra during the early months of Covid-19, briefly designated a “category 1 crisis responder” as we scrambled to redirect UK milk supply. I even had a letter from the Secretary of State asking that I be permitted to work under lockdown rules — somewhat redundant given my “commute” was from kitchen to laptop.

Once there, I was dealing with what to do with the large share of UK milk destined for cafés, bars and restaurants that shut overnight. Hospitality milk is packaged and distributed differently to supermarket supply, and there was neither the capacity to rapidly re-route it nor any environmentally acceptable way to simply dispose of it.

The point being: dairy is complicated. So, what sits behind the headline figures — milk production up, farmer numbers down?

Milk profit margins are tiny. Research in 2022 found that a £2.50 block of supermarket cheddar was yielding the farmer about 0.05p. That was before milk prices fell off a cliff. Prices have dropped about 15p/litre since last October, with AHDB now saying that the all-milk price is about 35p a litre. Reuters spoke to farmers in March who were receiving about 30p/litre and citing production costs of 40p.

The basic story is therefore a straightforward one. Domestic demand is constant, supply has increased, and so down goes the price and the margins. The only ones left able to compete are the big players.

This is a story of consolidation, not decline. The rise of the “mega dairy” is well-documented and widely debated. Roughly defined as units housing 700 cattle or more, these systems often rely on year-round indoor housing rather than grazing. As the number of dairy farmers has fallen, the number of mega dairies is estimated to have roughly doubled over the past decade.

That shift means a growing share of the national herd is now in large-scale units — what Sustainable Food Trust’s Patrick Holden has described as “battery cage cows”.

Not everyone agrees that this is a deterioration in welfare. Industry bodies argue that scale is not the opposite of good standards, and that larger units can invest more in technology, monitoring and animal health. But the underlying structural change is clear: fewer farmers, larger herds.

At the same time, dairy faces pressures that go beyond economics. Demand remains broadly stable, but some consumers are turning to alternatives over concerns about welfare and environmental impact. And while the number of serious water pollution incidents linked to dairy farming remains relatively small in absolute terms, it has risen each year since 2020. A recent Bureau of Investigative Journalism investigation found that “nearly one in five of the largest [dairy] units had been linked to pollution in recent years.”

More regulation might help curb pollution, but it could also accelerate the exit of smaller family farms, since larger operations are better placed to absorb compliance costs. That is the difficult environment in which farmers are operating: squeezed by higher energy and input costs, weaker farmgate prices, and uncertainty around inheritance tax. Against that backdrop, consolidation continues to advance. Shelves may remain stocked, but the question remains: at what cost to the countryside, and at what cost to the cow?

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Liam Stokes is a writer and environmentalist.

LNJStokes

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