Market report: Dairy margins feel the squeeze

Dairy producers’ margins over purchased feed narrowed by 1.29p/litre in the year to November 2009, according to Promar’s latest Milkminder costings.

Although feed prices fell by almost 5% over that period, milk prices were 6.8% lower, at an average of 25.63p/litre. And despite an increase in herd size and milk yields, to 177 cows and 23.9 litres/day respectively, margins over purchased feed averaged just 18.41p/litre in November, it said.

Meanwhile, new statistics from DEFRA have revealed a 1.3% fall in liquid milk consumption between 2007 and 2008, to a level some 14.2% lower than 10 years ago. Whole milk consumption fell by 2.4% between 2007 and 2008, with semi-skimmed rising by 0.5% and skimmed milk dropping by 8.7%.

Yoghurt and fromage frais fared considerably better, rising by 3.1% year on year, and by 41.3% over the past decade. Butter consumption eased by 2.4%, but was still 11.1% higher than 10 years ago, while cheese consumption dropped by 6.7%. Cream sales remained stable, with dairy desserts showing a 29% rise over the past decade