Market report: Dairy margins feel the squeeze - Farmers Weekly

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Market report: Dairy margins feel the squeeze

Dairy producers’ margins over purchased feed fell by 3.3% in January, compared with January 2009, according to data from Promar Milkminder.

The figures revealed that non-organic margins dropped by 0.61p/litre to 17.99p/litre in January, with average milk prices down by 0.81p/litre, to 25.14p/litre, over the same period.

Milk yields remained stable at 25 litres a day, but average herd size fell by one cow to 169 cows, leading to a 1% drop in milk production. This, combined with the fall in milk price, led to a £1176 fall in the total value of milk to £27,576. Feed costs also eased, by 0.36p/litre to 7.16p/litre, but this was not enough to prevent margins from shrinking.

Rolling annual results showed that the average herd size had decreased by two cows, to 167. Average yields increased by 1%, to 7658 litres, but a 7.6% drop in milk price meant the total milk value fell to £1850 a cow.

Rolling average feed costs fell by 0.23p/litre, to 6.5p/litre, but the margin over purchased feed eased by 9%, to 17.65p/litre, over the same period.

Market report: Dairy margins feel the squeeze

Dairy producers’ margins over purchased feed narrowed by 1.29p/litre in the year to November 2009, according to Promar’s latest Milkminder costings.

Although feed prices fell by almost 5% over that period, milk prices were 6.8% lower, at an average of 25.63p/litre. And despite an increase in herd size and milk yields, to 177 cows and 23.9 litres/day respectively, margins over purchased feed averaged just 18.41p/litre in November, it said.

Meanwhile, new statistics from DEFRA have revealed a 1.3% fall in liquid milk consumption between 2007 and 2008, to a level some 14.2% lower than 10 years ago. Whole milk consumption fell by 2.4% between 2007 and 2008, with semi-skimmed rising by 0.5% and skimmed milk dropping by 8.7%.

Yoghurt and fromage frais fared considerably better, rising by 3.1% year on year, and by 41.3% over the past decade. Butter consumption eased by 2.4%, but was still 11.1% higher than 10 years ago, while cheese consumption dropped by 6.7%. Cream sales remained stable, with dairy desserts showing a 29% rise over the past decade

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