Market report: Dairy margins feel the squeeze

Dairy producers’ margins over purchased feed fell by 3.3% in January, compared with January 2009, according to data from Promar Milkminder.

The figures revealed that non-organic margins dropped by 0.61p/litre to 17.99p/litre in January, with average milk prices down by 0.81p/litre, to 25.14p/litre, over the same period.

Milk yields remained stable at 25 litres a day, but average herd size fell by one cow to 169 cows, leading to a 1% drop in milk production. This, combined with the fall in milk price, led to a £1176 fall in the total value of milk to £27,576. Feed costs also eased, by 0.36p/litre to 7.16p/litre, but this was not enough to prevent margins from shrinking.

Rolling annual results showed that the average herd size had decreased by two cows, to 167. Average yields increased by 1%, to 7658 litres, but a 7.6% drop in milk price meant the total milk value fell to £1850 a cow.

Rolling average feed costs fell by 0.23p/litre, to 6.5p/litre, but the margin over purchased feed eased by 9%, to 17.65p/litre, over the same period.

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