Two sets of dairy farm results from different regions show an improvement over 2010 but a mixed picture between regions and herds.
Cumbria accountant Dodd & Co’s annual dairy farm profits survey of 54 specialist units showed the average farm generating a surplus after drawings and tax of almost 1p/litre in the year to the end of March.
However, Scottish farms in the survey achieved a 2p/litre surplus. “This was made up mainly by higher Single Farm Payments due to the historic system adopted by farms north of the border,” said partner Rob Hitch.
Milk prices also played a part – most Cumbrian producers were unable to secure supermarket contracts and prices were higher in both Scotland and further south in Lancashire and Cheshire, he said.
Most of the farms generated a surplus, with those achieving the highest surpluses generally but not always, the larger herds.
“Small farms are on the whole technically more efficient, but family drawings and or wages inevitably take all of the profit, resulting in a deficit. The large farms on the other hand generated surpluses of 1p/litre.
“The data clearly shows the advantage of spreading costs over more volume and the greater surpluses were generally achieved by larger herds. The top 25% averaged 355 cows compared with 104 in the lowest 25%.”
This advantage has seen expansion of the biggest herds whilst the smallest have stood still. This was more evident in Scotland where Rural Development Grants have encouraged investment at twice the level of that on farms in England.
South West dairy farmers continue to expand and saw profits rise by 15% in the year to the end of March 2011, according to a survey by accountant Old Mill.
However, the firm points out that the 15% rise in net profit to average £72,500 was lower than results for 2008 and 2009 and achieved purely because herds expanded in size – overall farm overheads continue to rise, said the firm.
Milk production increased for the fourth year running, to 144,307 litres a farm – 10% up on the year. Average milk prices rose by 0.82p/litre and combined with higher yields to increase turnover by 12%.
Producers were having to spend more to produce milk, with feed costs rising by 12%, vet and insemination costs up 25% to over 1.9p/litre. At 196 cows, average herd size across the 45 farms in the survey was up 8%.
The difference between higher and lower performing farms was also vast, with a number of farms still making significant losses before taking the Single Farm Payment into account.