Milk costs report shows record yields in challenging year

Uncertainty is the only certainty, with the weather and geopolitics pushing dairy costs, prices and performance to new limits in the milk year ended March 2026.

The Kingshay Dairy Costings Focus Report identifies the main trends and performance indicators, using data from 1,089 conventional herds and 88 organic herds.

See also: Drought means tough autumn choices for organic dairy herds

The 2026 report, published this week, reflects a year of extremes to March 2026, which saw record high milk production, a summer drought, flooding in winter, milk price highs followed by rapid falls.

Alongside this, the run up to the end of the milk year saw rocketing fertiliser and fuel prices as a result of the US action on Iran.

Records broken

The year of extremes included a record average yield for the conventional Holstein-Friesian herds in the report, at 8,848 litres a cow.  

However, the results show that the uptick in yield was not at the expense of feed efficiency, says Kingshay farm services specialist Emma Puddy.

© Tim Scrivener

Margin over purchased feed (MOPF) for herds in the series rose 3% on the year to £2,708 a cow, helped by a milk to feed price ratio of 1.40, the highest for 20 years.

Average concentrate costs, at £298/t, were down 9% on the previous year and the higher feeding rate also boosted butterfat and protein contents to 4.37% and 3.46% respectively.

Almost all herd types saw a rise in constituent levels.

The average milk price, at 41.74p/litre, was the third-highest on record, but 1.12p/litre lower than in the previous year.

More milk from forage also contributed to the rise in MOPF, at an average 2,652 litres a cow, up 9% on the year.

However, there were regional differences in this result with, broadly, producers in the West and the North having a better growing season than others.

The number of days grazing fell in all herd types, but overall there was an increase in milk from forage.

Milk prices

The top 10% herds by MOPF saw their milk price peak at 54.79p/litre in September 2025 while the bottom 10% performers were down at 27.91p/litre in March 2026, highlighting the benefit of aligned contracts which smooth out the peaks and troughs, a factor especially important in the second half of the milk year.

Over the year, aligned farmgate milk prices ranged from a low of 38.96p/litre to a high of 43.53p/litre, while non-aligned monthly averages were from 33.19p/litre to 46.37p /litre.

Cull and calf price impact

High calf and cull values have helped lessen the impact of the drop in milk prices. At 28.9%, the culling rate was slightly down on the previous year’s record of 29.2%.

The trend to cull earlier continued, with 53.3% of animals leaving the herd doing so in their first, second or third lactation and 29.2% in their fourth or fifth lactation.

Culling rates in larger herds are slightly higher than in the average herd.

Labour costs reached a record high, at £18.76/hour (including national insurance and pension cost) for a senior skilled worker and £14.63/hour for a minimum wage 21-year-old worker.

These rates mark a 51% rise in five years.

Performance gaps and opportunities

The Kingshay results repeat the evidence that there is still a large gap between the top 25% of herds and the average, in terms of production, health, input costs and milk price, says Kingshay’s development director Richard Simspon.

This means there are plenty of opportunities for producers to make incremental improvements that can add up to significant savings, despite many factors being outside their control.