Co-op will promote Channel Island milk
2 July 1999
Direct costs threaten farms
By Peter Grimshaw
ONE in 10 farm enterprises did not cover their direct costs in the 1998 harvest year, according to Devizes-based farm business consultants AKC.
Many farms costed by the company are moving heavily into the red after allowing for rent and finance charges, preliminary results up to February this year indicate. Only specialist enterprises such as potatoes yielded a satisfactory return.
"Many people dont realise the extent of the situation. Unless they have taken, or are taking remedial action, things may get even worse," says AKC managing director Andrew Henly.
Rent and finance charges for client farms have increased, on average, by about 20% in the past five years. This figure spans a broad range, from owner-occupied farms with no loans to those paying full market rents which are also borrowing heavily, where levels can top £250/ha (£100/acre).
Winter wheat gross margin, at £593/ha (£240/acre), remained almost as 1997, thanks to improved yields and lower variable costs which helped to offset the reduction in area aid payments. But barley and oilseed rape both showed sharp declines, due to lower prices and yields.
A 12% fall in milk prices outweighed considerable savings in concentrate costs. An average margin of £122/cow (1.79p/litre) left some dairy farms making a loss after deducting quota charges, management, rent and interest payments.
Looking ahead, AKC predicts prices below those at the same time last year. "There appears to be no reason to believe that prices will recover for the coming season," says the companys report. It particularly questions current levels of milk quota sale and leasing prices.
At a conference organised by the company in Devizes, Wilts, economist Prof Sir John Marsh, of Reading University, predicted that UK and European farming would divide into two groups.
One would contain farms which had been amalgamated into highly integrated, co-ordinated, international-scale businesses. The other would consist of small, family-sized, lifestyle farms operating "almost on a hobby basis," he said. *
Co-op will promote Channel Island milk
BREAKFAST Milk, the branded product developed and owned by Channel Island milk specialist Quality Milk Producers, is to be produced and packed by farmer-owned Devon co-op Torridge Vale, which takes over the processing licence from Unigate.
"Unigate did a superb job but we wanted to get closer to the farmers," says Minze Vries, managing director of Quality Milk Dairy Products, a subsidiary of QMP.
Until now, Breakfast Milk has only been sold in major supermarkets, but the company intends to broaden the market. It will be promoted as an "indulgent treat", through advertising campaigns in magazines and on television.
The new screw-top poly bottle is designed to be more user-friendly than the old carton and attractive enough to put on the table. "We are trying to make milk more interesting, and fortunately demand for Channel Islands milk is very strong with sales the highest for 12 years," says Mr Vries.
QMP chairman Michael McNamara, who farms Jerseys in west Wales believes such products are the only hope for the liquid milk industry. "What we are doing the milk industry as a whole should have been doing three years ago. It has brought style to milk." *
CORRECTION
Pea and bean prices – markets section. Unfortunately these prices were accidentally transposed in our grain, oilseeds and pulses table and in the trends section of the markets pages last week. We apologise for the glitch and would ask readers to check carefully any use of the figures and amend accordingly. *