The membership organisation is also warning that on top of continued cost pressures farmers are facing a winter of increased feed costs after the sustained hot, dry summer that has depleted winter rations.
While Farmgate milk prices are beginning to recover from over 12 months of extreme volatility and low prices, the ongoing global geopolitical instability and conflict have seen the cost of key items such as fuel and fertiliser rise significantly.
“The Welsh dairy sector is worth £929 million to our economy and supports thousands of jobs, on farm, in the supply chain and across the allied industry,” said NFU Cymru Dairy Board Vice Chair Martin Griffiths.
“The sector delivers day in, day out, a supply of climate friendly nutritious milk and dairy products for the people of Wales and further afield with demand, especially for protein, continuing to grow. However, to sustain this growth we need profitable dairy businesses that have the confidence and cashflow to invest in their future.”
Griffiths said a major issue is that its members’ confidence and financial resilience is being eroded by significant pressures.
“In some instances, our farmers are supplying milk below the cost of production – they are operating on a day-to-day loss,” he added.
He quoted data from the Agriculture and Horticulture Development Board that has shown that the cost of red diesel, a key farm input, has increased by 50% compared to September last year. The price of ammonium nitrate fertiliser, an integral input on grasslands across Wales, has increased by around 20% since February 2026, impacting on the costs of forward purchasing forage.
NFU Cymru is calling on the Welsh Government to continue to evolve the Sustainable Farming Scheme (SFS) to help give stability to the sector.
The scheme rewards farmers for sustainable food production while managing environmental challenges like climate change and biodiversity loss.
Griffiths said that with just over 50% of dairy farms currently participating in the SFS, there is an opportunity to evolve the scheme to make it more attractive and accessible for more dairy farmers.
