Leap in profit forecast for average dairy unit

28 September 2001




Leap in profit forecast for average dairy unit

By Robert Harris

DAIRY farmers should earn an average of 2.5p/litre more this milk year compared with 2000/01, says Promar International.

Better prices, together with greater milk output, a depressed quota market and low interest rates, will boost business performance in 2001/02, says Tim Archer, Promars national finance consultant.

Turnover on the average 100ha (240 acre) dairy farm is likely to rise by £27,300 to £217,700 this year, he predicts in Promars latest farm business accounts annual report.

Although overheads will rise by about 14%, pushing total costs to £184,800, that will still leave a profit of £32,900 after depreciation.

Last milk year, the average Promar-costed farm earned £17,600. It could have been much worse had producers not increased herd size, raised yield/cow and taken full advantage of cheap quota.

But the top 25% made 2.6 times that amount. "They have planned their resources efficiently to maximise output and turnover," says Mr Archer.

Over the past five years, Promar figures show the average dairy farmer cut costs by 7p/litre. Wages dropped from 2.8p to 2p/litre, farm repairs halved to 0.6p/litre, net reinvestment was slashed 92% to 0.4p/litre and net private drawings fell almost 50% to 1.5p/litre. "These trends are absolutely unsustainable," says Mr Archer.

&#8226 Our latest milk price table for August deliveries shows no change in underlying prices, apart from Milk Link. The company raised its standard litre price by about 0.5p/litre, but the figures it supplied as FW went to press wrongly showed a similar-sized reduction.

Milk Links standard litre prices should be almost 1p higher, which would move it up three places in our table. Other changes in position are solely due to additions or cuts in seasonality bonuses. &#42


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