Welsh dairy farmers hit by soaring fuel and fertiliser costs

Mark Mansfield

Welsh dairy farmers are facing a growing threat to their financial viability as soaring fuel and fertiliser costs deepen pressure on a sector already struggling with low milk prices.

The Farmers’ Union of Wales (FUW) has warned that a combination of international instability, rising input costs and persistently weak returns is placing severe strain on farm businesses across the country.

According to the union, recent geopolitical tensions in the Gulf and concerns over disruption to global energy supplies through the Strait of Hormuz have contributed to sharp increases in production costs.

Fertiliser prices have risen by as much as 53% compared with levels before the latest conflict, while the cost of red diesel has effectively doubled in recent months.

The warning comes as many dairy producers continue to grapple with milk prices that the FUW says remain below the cost of production.

Previous union analysis found milk prices had fallen significantly since September 2025, leaving some farmers struggling to cover their operating costs.

Pressure could intensify further in the coming weeks as the spring flush increases milk volumes, traditionally placing additional downward pressure on farmgate prices and tightening cashflow.

Industry concerns have also been reinforced by recent analysis from the Central Association of Agricultural Valuers, which warned that tightening oil markets could reach a tipping point in early June, with higher energy costs already feeding through into agriculture.

In response, the FUW has held discussions with major banks to explore what support could be offered to farming businesses under strain.

Meetings have already taken place with representatives from HSBC and NatWest, with discussions focusing on maintaining flexibility around lending arrangements, overdrafts and cashflow support.

The union is encouraging farmers experiencing difficulties to engage early with lenders, accountants and advisers.

‘Perfect storm’

FUW President Ian Rickman said: “Welsh farmers are currently facing a perfect storm of international instability and soaring input costs. The sharp increases we are seeing in fertiliser and fuel costs are placing enormous pressure on farm businesses at a time when many dairy farmers are already producing milk below the cost of production.

“These challenges are completely outside farmers’ control, yet they are having a direct and immediate impact on the viability of family farms and rural communities across Wales.

“It is therefore vital that farmers speak openly and early with their banks and professional advisers if they are facing difficulties.

“Our recent discussions with major lenders have been constructive. It is encouraging that banks recognise the exceptional circumstances currently affecting the agricultural sector. Flexibility and understanding will be crucial in helping viable farm businesses navigate this period of uncertainty.”