The financial year ended 31 March 2026 was a stronger one for some UK dairy farmers, but the situation now is very different, with a significant drop in milk price alongside drought conditions. Alongside this, January 2027 may bring a large tax bill, according to the annual Milk Cost of Production report by Old Mill accountants and the Farm Consultancy Group.
Headline figures show that the cost of production averaged 42.38p/litre against a total income of 54.81p/litre, boosting profits to 12.43p/litre – more than double the five-year average. However, this masks considerable variability between farms and systems and doesn’t reflect the current reality of sharply lower milk prices and extreme weather challenges.
“Spring calving systems may have been best suited to the market conditions of 2025/26 given the higher milk price in the first half of 2025,” explains Bradley Causey, rural accountant at Old Mill, part of the national Kinbrook Group. “Interestingly, we may see a reversal of this in 2026/27, with spring calvers possibly being least suited to the financial environment given the lower milk price this spring.”