Dairy margins over purchased feed fall despite bigger herds

Dairy farmers’ average margin over purchased feed dropped to 15.86p/litre in April, down from 17.97p/litre last year, according to the latest report by Promar Milkminder.

The total milk value for a single herd dropped from £34,315 to £32,782, meaning the margin over purchased feed for a herd fell from £24,580 to £23,190.

This was despite an increase in herd size – from 189.7 cows to 201.6 – and a reduction in purchased feed costs, from £9,735/herd to £9,592/ herd.

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Clients of Promar, which is the UK’s biggest farm consultancy, saw their average milk price drop from 25.09p/litre last year to 22.42p/litre in April.

Yields remained unchanged at 27.3 litres a cow, although the cold spring meant yields from grazed forage fell from 5.4 litres a day to just 2.9 litres.

Promar Milkminder – April 2016 – national average, all farms

  April 2016 April 2015
Cows in herd  201.6 189.7
Cows in milk 178.4 166.7
Number of cow + heifer calvings 10 + 4 10 + 3
Number of cows leaving herd 5 4
Total milk produced 146,240 litres 136,756 litres
Yield per cow in milk a day 27.3 litres 27.3 litres
Yield from grazed forage per cow per day 2.9 litres 5.4 litres
Yield from all forage per cow per day 8.8 litres 9.2 litres
Milk price 22.416p/litre 25.092p/litre
Total milk value £32,782 £34,315
Concentrate use per litre 0.32 kg 0.31kg
Total concentrate use 46.169t 41.930t
Concentrate price per tonne £201 £224
Other feed cost £311 £328
Total feed cost £9,592 £9,735
Feed cost per litre 6.56p 7.12p
Total conc.equiv at 86% dry matter 48.703t 44t
Margin over purchased feed per litre 15.86p 17.97p
Margin over purchased feed per cow £115 £130
Margin over purchased feed per herd £23,190 £24,580

Thousands wiped off average dairy farm incomes

Interim figures from clients of Dodd & Co accountants, showed a massive £185,000 was wiped off the average dairy farmer’s milk income in their last financial year.  

Producers with accounting years ending between November and January saw their milk prices fall 7.4 p/lire to 23.23 p/litre and this was expected to be even lower for those with accounts ending in March/April.

“Although costs have fallen, after tax and drawings this leaves a deficit of 2.63ppl,” said Dodd & Co. “Even adding back depreciation, businesses are still losing 0.19ppl, before any capital expenditure or debt repayment.

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The latest milk price league table from AHDB Dairy showed more price cuts of between 0.5p and 1p/litre in June, although there were some positive signs in the market, it said.

“The majority of wholesale prices have picked up through May. Sentiment in the market is now more positive, particularly in the UK, driven mainly off the back of lower than expected milk volumes,” said the levy board.