How UK milk producers score on efficiency but lose on profit

At £27/hour, Danish herds have the highest labour cost among EDF countries © Adobe Stock

The European Dairy Farmers is a hub for farm economics and comparative costings, with more than 450 farmer members across 18 countries.

The UK group includes a wide range of milk production systems, from grass-based lower input to housed high output herds, with an average herd size of 301 cows.

This is close to the European Dairy Farmers (EDF) average of 320 cows, but considerably higher than the UK average herd size of 174 cows.

See also: Report reveals growing performance gap within dairy systems

Production is costed annually for all countries in the EDF.

The latest report, for 2023-24, reveals that a lower milk price and declining support payments result in considerably lower profits for UK members than those of equivalent dairy farms across Europe.

The bulk of the UK EDF members are in England.

© Adobe Stock

Kingshay development director Richard Simpson is the UK’s EDF scientific partner, a role in which he validates the data of individual UK farmers for the costings.

Overall, the average UK milk yield – at 9,859kg energy corrected milk (ECM) a cow – was below the EDF average of 10,682kg ECM a cow.

Within the UK figures are low-input herds producing 5,000kg a cow to high-output units with a yield above 13,600kg a cow.

They range from 100-cow herds to those with 750 cows, and an average 76% of the dairy land is in grass. For every 10 cows, there are 6.3 replacement animals in the pipeline.

The cost of production results from 2023-24 highlighted some key points, says Richard.

• UK farms are efficient – total milk production costs/kg, at 42.8p/kg, are 3.4p/kg or 7% lower that the EDF average
• Leaner machinery and lower labour costs contribute to these lower average production costs for the UK
• The average UK milk price was 3p/kg less that the EDF average, at 38.4p/kg 
• Subsidy support for UK producers of 1.2p/kg was 70% below the EDF average
• UK milk profit of 2.2p/kg was 55% lower than the EDF average of 4.8p/kg.

While there have been changes in all countries since 2023-24, the withdrawal of Basic Payment Scheme in England means that the relative position of its milk producers is likely to have worsened.

“When today’s milk price is applied – which for many is close to 30p/litre – alongside ever-increasing costs, the results don’t look very rosy,” says Richard.

He points out that farmers participating in EDF are efficient business managers, performing at above average levels, who want to know how they compare to others.

They take the time and effort to put in the level of detail required to produce the reports and make the comparisons.

Different approach, different countries

Dairy farms in the Republic of Ireland are among the most profitable © Adobe Stock

Factors that benefit continental milk producers are likely to include the wider extent of farmer co-operative ownership of processing capacity, says Richard.

“Along with this is a question of how milk is valued – in the UK, we are unique among EDF partners in having 50% of milk going for liquid use.

“Elsewhere, a higher proportion goes into cheese in particular, and other dairy products.

“Fresh produce in some countries – like France and Italy – is valued more highly and takes more space at retail level than is the case in the UK, where so much dairy goes into lower level products and branded, ultra-processed food.

“There is a massive cultural difference in the food culture of other countries and more drive to add value to milk for home sale. Although there are some good operators here on that front, and exports are important too of course.”