Investing in extra slurry storage capacity will be one of the top priorities for dairy farmers over the next 12 months, according to a survey conducted by Barclays Bank at last week’s Dairy Event and Livestock show.

Over half of the 80 farmers interviewed planned some sort of major business investment, with 27% saying they would prioritise additional slurry storage to comply with the new Nitrate Vulnerable Zone regulations. Other major investments included more cows, cattle housing and milk storage, with the average spend around £140,000.

Some 44% planned to expand milk production in the next 12 months, although Barclays’ Euryn Jones said this was below the 60% that planned to expand two years ago, when the survey was last conducted, reflecting a more cautious attitude.

“Although milk price is considerably higher than in 2006, farmers are also very aware that improved margins have been eroded by significant increases in production costs over the last two years.”

Farmers were also asked to predict December’s milk prices. Estimates ranged from 23 to 33p/litre, with an average of 28p/litre. “While many producers are hopeful that milk prices may increase marginally, the answers demonstrate that farmers interviewed were realistic about future prospects for milk prices,” Mr Jones commented.

“Although supplies of milk are short, weakening global dairy commodity prices are likely to make it difficult for dairy farmers to receive any significant increases in the months ahead.”

Key survey findings:

  • Over half planned major investment in the next 12 months
  • Average planned investment of £140,000
  • 27% needed to invest in additional slurry storage
  • 44% planned to expand milk production – average increase of 18%
  • 53% had agreed a winter contract price for feed and fertiliser
  • 19% intended to forward-purchase winter feed
  • 52% had already bought fertiliser for next year
  • Estimated December milk price ranged from 23 to 33p/litre (average 28p/litre)