German dairy processor Ehrmann saw its profitability plummet in the UK last year as high milk prices forced it to pay more to farmers.
British milk prices hit their highest mark since 2022 last year and caused Ehrmann’s losses to double to £3.6m in the year to 31 December.
The business said it had maintained a strong trading performance in 2025 and continued to protect and grow market share. But a customer’s decision to take capacity in-house led to a 60% drop in volumes in the co-packing operations. Ehrmann added this fall was largely offset by increased sales in other areas.
Turnover at Ehrmann Cornish Dairy for the year increased 35% to £85.7m.
It marked the first full year since the dairy processor bought Cornish supplier Trewithen Dairy as part of a major push into the UK.
The deal – the value of which has not been disclosed – saw Ehrmann invest £20m to expand Trewithen’s dairy processing capacity and capabilities at its site in Cornwall. It has since rebranded the old Trewithen Dairy business as Cornish Dairy Co.
In its latest accounts, Ehrmann said stabilising milk prices towards the end of 2025 meant it had now returned to profitable trading and this was expected to grow through the current year.
With milk prices now falling, it has started construction on a new state-of-the-art desserts facility, which is scheduled to finish by the end of 2026.
The business also now plans to launch efficiency projects that are planned for completion by early 2027. It did not give any details but said they were expected to deliver “major cost savings” in what will be “defining years for the business”.
Lower prices have resulted in milk production easing across the UK and consequently led two UK two processors – Arla and Saputo – to increase their prices to 37p/litre for July and August deliveries. Some farmers hope this will encourage other processors to follow suit.
However, dairy commentator Chris Walkland told Farmers Weekly said that while milk prices are going up, falling prices for cream, butter, and cheese will make it hard for many processors to pay more.
“I can’t see any major change to milk prices this year. Some improvements, but not major.”
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