8 June 2001

PRICERISEGIVESLIFTTOMARGIN

RECENT increases in milk price will push up margins by £140/cow in the next 12 months, but its volatility is still a threat to profitability, reveal ADAS Milk Cheque predictions.

Results for March show that margins over purchased feed (MOPF) improved by £5/cow, due mainly to the 1.15p/litre increase in average milk price. This is good news for producers, says ADASs Ian Powell.

"The outlook from Apr 1 is for MOPF to increase rapidly by about £140/cow which equates to £20,000 over the next 12 months. In addition, herds will benefit from a lower cost of quota leasing, typically saving £5000/year.

"This is welcome, but the average cost of milk production is still likely to be about 20p/litre with only efficient producers making a profit. Care is needed as milk price is still volatile and is just as likely to fall as to increase further."

In addition, the latest Milk Cheque results show that the poor forage made last summer led to higher winter feed costs with feed rates up from 0.31 last March to 0.35kg/litre this March, for only a 0.5 litre/cow increase in yield. &#42