Milk prices predicted to improve for year ahead

Dairy prospects look brighter this milk year, after a tough 2012/13 for most dairy farmers.

Farm consultant Andersons is predicting better average milk prices and smaller variable costs, based on a more “normal” weather year.

Using their Friesian Farm model, Andersons have predicted milk prices would rise with further increases factored in for later in 2013 as firming world markets and limited GB supplies combined to lift prices.

Variable costs would fall, said Richard King, head of research, due to a forecast fall in feed usage and slightly lower prices.

Friesian Farm

  • 1.125m litres

  • 150 cows and replacements

  • Year round calving system

  • Liquid contract (non-aligned)

  • 100ha, of which 40ha on FBT

“This of course, is dependent on a more ‘normal’ weather year,” he said.

The Friesian Farm model shows costs drifting upwards, however, the farm got to a position where it was making money again in 2013/14, he added.

But single farm payments will be lower by at least 5%, possibly more, said Mr King. This is as a result of EU budget settlement agreed back in February.

“The outlook may therefore look brighter for the immediate future, but businesses need to be structured to provide sustainable returns for the medium and long term,” said Mr King.

“Therefore producers need to look to their own management, as well as the market, for profitability improvements.”

ANDERSONS FRIESIAN FARM – Source: Andersons The Farm Business Consultants     
 Pence per litre









 Milk  28.6  28.8  31.5  30.6
 Culls & Calves  2.7  3.0  3.1  3.1
 Output  31.3  31.8  34.6  33.7
 Variable Costs  14.1  16.7  14.4  14.0
 Overheads  11.3  11.5  11.8  11.9
 Drawings & Tax  3.9  3.9  4.0  4.0
 Rent & Finance  1.4  1.5  1.6  1.8
 Cost of Production  30.8  33.6  31.8  31.7
 Margin from Production  0.6  (1.8)  2.8  2.1
 SPS (and ELS)  2.3  2.2  2.1  2.0
 Business Surplus  2.9   0.4  4.9  4.1

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