Dairy margins improving says ADAS

7 August 2001

By Olivia Cooper

LATEST ADAS Milk Cheque results show a continuing trend of improving milk price and margins.

Herd size has increased from 133 in July 2000 to 148 in July 2001. But despite the number of cull cows still being milked, daily milk yield per cow has also increased by 3.6%.

This suggests ADAS clients have responded to higher milk prices, lower quota costs and foot-and-mouth by increasing milk production by 11.5% in the last year, says Milk Cheque manager Ian Powell.

Milk price is pegged at 20.56p/litre for July, and milk quota is trading at about 15.75p/litre for 4% butterfat today, with leasing prices weakening to 0.75p/litre.

One of the problems posing farmers this autumn is the lack of forage and increased feed costs.

Milk yields from forage and grazing are both down, meaning that concentrate use has risen by 21kg per cow year on year, and purchased feed costs are 20% higher than last July on a 12 month rolling average.

Despite this, margin over all feed per cow is up by 16/cow to 86 in July, or 807 on a rolling 12 month basis.

Dairy units need to plan ahead their forage supply in the short term, and decide on herd size, yield and the milk quota needed in the longer term, says Mr Powell.

Production is likely to fall in the last quarter of this year, once cull cows pass into the OTMS.

Once production starts to rise again following restocking, milk prices could fall and quota prices rise, giving a poorly-planned farmer a double whammy.