By Robert Harris

WELL-MANAGED family farms will continue to hold their own against agribusiness, even though most milk will be produced by just 15,000 producers in England and Wales by 2005.

The UK dairy industry is rapidly following the USAs lead in tackling volatile milk prices, John Allen, ADAS head of dairying told an audience at the recent Dairy Event. Herds supplying 2 million litres or more a year would soon be commonplace.

“Many of the most efficient and progressive family farm units are already over the 1.5m-litre mark and are expanding at 10% a year,” he said.

Increased output would take two main routes – either intensive, 200-cow units producing 10,000 litres each or extensive, 500-cow units yielding 4000 litres apiece, he believed. Some large scale units could combine high yields and cow numbers, producing 5m-plus litres, he added.

Recent financial results from a firm of US accountants showed average profits in the western US exceeded £300 a cow from an average milk price of 18.4ppl. Returns on total capital were 13-20%; on the best operations over 40%, said Mr Allen.

“In the UK they have dropped to just one or two %, with average profits at less than £120 a cow.”

Meanwhile, an American producer taking a cursory glance at our August milk prices could be forgiven for thinking UK producers are doing rather well. However, seasonal adjustments, at 2-3.5ppl, are skewing the picture somewhat, says Stephen Bates of Wye College.

October milk cheques will come as a shock to many producers, he warns. “There will be a double impact – seasonal bonuses will end and some will become negative, and recently announced price cuts will also hit home.”

Overall values will drop 3-5ppl for the month, depending on contract type, he adds.

September for August 1999 deliveries (updated monthly)

COMPANY This
month
Last
month
Transport flat rate
(ppl)
Transport volume
(ppl)
Bactoscan/
total bacteria
(ppl)
Somatic cell count
(ppl)
Butterfat
(ppl)
Protein
(ppl)
Seasonal
adj (ppl)
Price/std
litre (ppl)
Av price
Sept98-Aug99
Southern Co-op 1 1 0.00 -0.40 0.20 0.10 10.08 9.73 3.50 23.45 19.97
Unigate – EODC 2 4 -0.43 0.00 0.30 0.30 3.90 4.26 3.50 22.72 20.16
Express (Avonmore) 3 6 0.00 0.00 0.00 0.00 0.20 0.15 3.00 22.55 20.18
Golden Vale 4 2 -0.36 -0.58 0.40 0.30 8.51 9.74P 3.00 22.30 19.98
Express Dairies 5 3 0.00 0.25 0.80 0.60 6.79 10.82P 3.00 22.26 19.77
Nestlé England (Dalston) 6 11 -0.90 0.00 0.20 0.00 8.34 11.09 3.50 22.24 19.73
Bodfari 7 7 0.00 0.20 0.40 0.20 8.03 10.59 2.50 21.92 20.00
The Milk Group 8 8 0.00 0.00 0.00 0.30 8.24 10.06 3.00 22.60 19.35
Wiseman England 9 9 0.00 0.00 0.50 0.50 0.90 0.12 2.00 21.47 20.03
ACC (Stockton) 10 10 0.00 1.80 0.00 0.00 7.09 9.76 2.25 21.40 19.55
Wiseman Scotland 11 14 0.00 0.00 0.50 0.50 1.36 0.34 2.00 21.25 19.87
Wiseman Aberdeen 12 15 0.00 0.00 0.50 0.50 1.36 0.34 2.00 21.25 19.07
Wyke Farms 13 9 -0.54 0.00 0.10 0.00 7.58 10.47 2.20 21.00 19.29
South Caernarvon 14 12 -0.73 0.00 0.00 0.00 7.82 10.92 2.50 20.82 19.15
Nestlé Scotland 15 17 -0.90 0.00 0.20 0.00 8.34 11.09 2.00 20.74 19.73
Midlands Co-op 16 13 0.00 0.00 0.20 0.38 0.00 0.00 0.00 20.63 20.95
Glanbia Scotland (Lockerbie) 17 20 -0.82 0.00 0.10 0.10 6.93 10.71 2.00 20.13 19.45
Scottish Milk 18 23 -0.45 -0.10 0.30 0.20 7.50 10.46 2.00 20.11 18.73
Lancashire Dairies 19 16 0.00 0.00 0.56 0.53 0.00 0.00 0.00 19.53 20.36
MD Foods (Premier) 20 21 0.00 0.30 0.80 0.80 7.38 3.30P 0.00 19.30 19.77
Milk Marque – EODC 21 18 -1.23 0.50 0.30 0.30 7.30 9.87 2.20 19.24 18.04
Milk Marque 22 22 -1.23 0.00 0.30 0.30 7.30 9.87 2.20 18.74 17.54
Express (Waterford “PSL” contract) 23 19 -0.36 0.00 0.15 0.20 0.00 0.18 0.00 18.52 19.70

Wye College Source: WYE COLLEGE
University of London

http://www.wye.ac.uk
  • All prices are before 0.04ppl Milk Development Council levy
  • Price per standard litre is after transport and marketing charges, assuming daily collection of milk, 4.1% butterfat, 3.30% protein, 1101 litres/day, TBC below 20,000/top band Bactoscan and cell count below 250,000
  • For Glanbia Scotland (Lockerbie), Glanbia (Avonmore) and MD Foods, figures include minimum group bonus paid to over 95% of farmers
  • For Unigate – EODC, the price includes “6 keys”; top “general compliance” score; top “farm inspection” score; 0.3ppl group bonus; “sovereign supplier” bonus; group term bonus; and milk collected every other day
  • Price includes farm assurance bonus of 0.3ppl for Golden Vale and South Caernarvon, and 0.2ppl for Scottish Milk

    P=payment for protein capped (at 3.3% for MD and Express, 3.35% for Golden Vale)