4 December 1998

Dairy margins reverse 18 months of decline

DAIRY margins on costed farms increased marginally in October, ending 18 months of decline.

ADAS results show higher milk yields and lower feed costs during the past year outweighed a 5% fall in the average milk price to 19.82p/litre. This pushed the rolling 12-month margin over purchased feed up to £1109 a cow in October, £3 more than the previous month, says ADAS Milk Cheque manager, Ian Powell.

"This is only a modest rise, and is still £158 down on last year. But at least it is an increase and there are some positive signs for the month to come. There are indications that the milk price is increasing, and Milk Marque has done well on the spot market recently. Although there has been some increase in feed prices recently, they are generally staying reasonably low."

Improved operating margins among dairy companies may also ease next months Milk Marque selling round, says Mr Powell. "Supermarkets have increased their milk prices by 0.5p/litre at a time when most dairy companies have reduced their farmgate prices."

Monthly average results show daily milk yield up slightly on the year at 21.4 litres a cow. Rolling 12 month average yield now stands at 6694 litres a cow.

October figures from Axient Milkminder show a very similar picture. Rolling MOPF rose £1 to £1089 a cow, £182 down on the year. "This could be the first sign that we are finally turning the corner," says Axients Tim Harper.

The monthly milk price remained at just over 19.8p/litre, only 0.02p/litre below Septembers value. "This suggests the milk price could be bottoming out."

Monthly figures show farmers have increased output, milking four more cows compared with last year. Milk yield is also higher, up 0.3 litres to 20.9 litres a cow a day, though butterfat is slightly lower. Milk from forage slipped by 0.6 litres a day to 7.3 litres. "But these figures do not really bear out reports that cows are not milking too well on poor silage." &#42