To explore the challenges and opportunities for dairy farmers transitioning to sustainable, financially viable systems, the bank and WWF-UK have released a comprehensive case study report. This report includes in-depth interviews with five dairy farmers across the country who have adopted nature-friendly practices. Additionally, over 85 participants including dairy farmers, farming advisors, supply chain representatives, banks, and civil organisations involved in the dairy sector have engaged in two workshops in England and Wales.

Many farmers in the workshops who had adopted nature friendly farming practices reported that their businesses became more resilient to climate shocks like floods and droughts, as highlighted by the case study findings. Although they faced initial challenges due to higher capital costs and operational adjustments, they observed improved business resilience following this “fallow period” thanks to a reduced reliance on external inputs. Key drivers of this transition included the need to address climate impacts and the availability of financial incentives. 

Read the full findings

Many farmers face increasing financial instability measured by factors including input costs and milk prices, policy uncertainty, and pressure to intensify production to increase yield. Mainstream success is often measured by milk volume and its constituents (solids, fats and protein levels), pushing farmers to intensify their use of nitrogenous fertilisers, house animals year-round, and rely on concentrated feed.

These practices have the potential to lead to excessive slurry, soil erosion, and high dependency on external input costs such as feed, fertilisers, and veterinary care.

Climate change exacerbates these difficulties. Extreme weather in 2017-18 cost Scottish farmers £161m in losses , while in Wales, ruminant livestock losses totalled £206.7m in 2018. Market volatility, policy uncertainty, and financial risks further challenge farmers' ability to adapt to sustainable practices.

Read our 2025 Dairy Market Outlook

Redefining farming success requires moving beyond output metrics to consider soil health, biodiversity, and animal welfare. Optimising farm resources, rather than maximising production, could strengthen resilience. Key strategies include:

• Grazing optimisation: Managing livestock based on local conditions to maximise grass availability.
• Soil management: Encouraging plant diversity, reducing synthetic fertilisers and pesticides, and promoting regenerative grazing.
• Financial efficiency: Lowering input costs through nature-friendly practices, which enhance soil and animal health, supporting with improving business resilience.

The findings of this work reinforce the conclusions of a 2024 Soil Association Exchange report, which found that farmers identified financial risks as a key barrier to trying more nature-friendly actions.

A perspective shared by farmers at the workshops was that they have been structured for a high input-high output systems as “insurance” due to their predictability, despite their vulnerabilities to climate change and market fluctuations. Debt, changing policies, volatility in input and milk prices, and unreliable advice create additional hurdles.

But farmers who adopted nature-friendly practices found that a challenging business environment also presented an opportunity to rethink their farm model and systems. Rising feed and input costs, in particular, emerged as a key driver of change for dairy farmers.

One of the most valuable ways for farmers to consider implementing new practices is learning from other farmers. Peer-to-peer knowledge exchange — through direct conversations, farm visits, and farmer clusters — can encourage farmers to share insights and build confidence:

• Farmers tend to trust the experiences of their peers.
• Farmer-led knowledge-sharing provides practical, real-world examples of what works and what doesn’t.
• A library of case studies showing farmers that integrating nature  can be successful.

Encouraging more structured peer support networks, and having a library of case studies, could accelerate the shift towards sustainability. This is one of the reasons why we have published a case study report with WWF-UK, alongside WWF-UK’s series of short films with five farmers.

The WWF-UK case study report showcases the actions, lessons and results of each of the 5 case study farmers. 

In 2022, Andrew Rees was a runner-up in Farm Carbon Toolkit’s ‘Soil Farmer of the Year’ award, which aims to find the best farmers and growers who are engaged with and passionate about managing their soils.

Andrew’s ambition is to produce as much as possible from the Pembrokeshire farm’s own resources, to be less reliant on external supplies. He is concerned about the effects of climate change and sees the importance of having a biodiverse farm, which gives him the flexibility to adapt to changing conditions year by year.

Andrew shares his insight on hot topics including self-sufficiency, managing finance and risk, measuring decarbonisation, animal welfare and productivity, and exploring silvoplasture. 

Watch here: Andrew Rees, Moor Farm, Pembrokeshire, Wales

Farmers do not need to overhaul operations immediately. Incremental changes, such as trialling new techniques on a small scale, could allow you to adapt and learn gradually. Research, networking, or diversified funding options could also help manage risk.

The Agri-Food and Biosciences Institute (AFBI), in collaboration with leading dairy research and industry organisations, has announced the launch of the UK Dairy Carbon Network project. Funded by Defra, this pioneering initiative aims to investigate how the dairy industry could significantly reduce greenhouse gas (GHG) emissions by deploying innovative mitigation measures. 

The following explainers in Scotland is also for farmers to consider what nature-friendly practices they could be interested in taking, based on potential costs, government and market incentives, and potential co-benefits to adopt these practices:

• Scotland

Find out about the ways we could support you here

This article is based on reports prepared by NatWest Group plc (together with its subsidiaries the ‘NatWest Group’) and WWF-UK for information and reference purposes only and does not provide any form of legal, tax, investment, accounting, financial or other advice and should be read alongside the cautionary note available on pages 54-55 of the ‘Regenerative dairy farming: A path to profit and sustainability for UK farmers’ report, and pages 25-26 of ‘Regenerative dairy: Insights from sector engagement in England and Wales’ report.

This article and the key findings, estimates and projections referred to in this article are forward-looking statements. There are many significant uncertainties, assumptions, judgements, opinions, estimates, forecasts and statements made of future expectations underlying these forward-looking statements which could cause actual results, performance, outcomes or events to differ materially from those expressed or implied in these forward-looking such statements. Accordingly, undue reliance should not be placed on these statements.

The case studies referenced in this article are intended for illustrative purposes only. Findings, estimates, projections and any information contained or accessible through the websites mentioned, are based on various industry sources and other information, and are based on assumptions and estimates and the result of market research, and speak only as of their respective date.

NatWest Group makes no representation, warranty or assurance of any kind, express or implied, or takes no responsibility or liability as to the fairness, accuracy, reliability, reasonableness, correctness or completeness with respect to any data owned by and websites operated by any third party and referenced in this article.

The information, statements and opinions contained in this article do not constitute a public offer under any applicable legislation, an offer to sell or solicitation of any offer to buy any securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. This article is not intended (i) to form part of any communication of any offering issued under this article and it is not intended to be an advertisement for the purposes of the UK Prospectus Regulation and investors should not make any investment decisions based on the information included in this article; or (ii) to be a communication in relation to any particular product or service for the purposes of Section ESG 4.3.1 of the Financial Conduct Authority Environmental, Social and Governance sourcebook.