Drop in milk value anticipated

TWO-THIRDS OF dairy producers surveyed by Barclays Bank at the recent Dairy Event expect the milk price to fall over the next two years.

That marks a big shift from last year, when most expected the opposite.

But despite their expectations, 70% of the 94 farmers surveyed said they intend to increase production by an average of almost 20% in the next two years.

Richard Lole, Barclays‘ national agricultural policy manager, said it was greatly encouraging that two out of three farmers said they knew their costs of production, almost double the number in last year‘s survey. .

“However, the average of 16.1p/litre is still relatively high since drawings are likely to amount to a further 2-3p/litre.

“This means many businesses would not be able to afford realistic levels of reinvestment if income were to fall below 18p/litre.”

The survey also revealed that only one in four farmers said they would include the single farm payment when calculating the future profitability of their milk production.