3 November 2000



DAIRY farming has not traditionally suffered through currency fluctuations, but in recent months it seems that has changed.

Added to problems caused by the strength of sterling against the k over the past year, milk producers now have to contend with the strengthening US $ forcing up feed prices.

The effect of currency changes on milk price earlier this year may be difficult to justify: Half of UK milk production goes to the liquid market, and transport costs for bringing in milk for processing are high.

It is harder to argue against the increase in protein feed prices. Imports of soya are essential and other protein feed prices, such as rapemeal, increase in line.

These factors will make the recent milk price rise all the more welcome, but it may well be countered by increases in input costs. One consultant reports in this update that he believes input costs will rise by 0.8-1.3p/litre this year.

Improving profits must, therefore, remain the focus of producers, even though changes may take time to realise. A decision to add value eight years ago is now worth 15p/litre for milk made into cheese on one farm featured in this update. A further two farms featured are considering how they can maximise output from the resources available.

Other options worth considering for improving profits in this update include changes to breed of cow, using sexed semen in practice, converting to organic production and rearing Holstein bull beef.