20% of dairy farmers set to quit

By Robert Harris

UP TO 20% of dairy farmers are set to leave the industry in the next two years, according to accountants Deloitte & Touche.

Sterlings strength, aggressive loss-leader tactics by the supermarkets in fresh milk sales and processor amalgamations have driven milk prices down, says the companys Mark Hill.

The typical farm gate price for milk is now just 15ppl – 4p less than the cost of production before rent, finance and leasing costs, he reckons. Farmers face a “triple whammy” in the next 12 months, says Mr Hill. And with no sign of better prices on the horizon, losses will continue.

That will push quota values down to about 30p, eroding farmers retirement fund. And capital gains tax reform means a farmer with 600,000 litres of quota worth £250,000 will, after Apr 1999, have to pay £17,000 in tax compared with nothing now. “The clock is ticking. Delay and indecision will cost money.”