Milk margins continue downward spiral

By Robert Harris

RECENT dairy farm costings for 200 of Bibbys largest customers show margins fell 10% despite better technical performance last milk year.

Margin over purchased feed for the average herd of 98 cows fell in the 1997/98 year to £1136 a cow, from £1258 the previous year. Yield increased by 250 litres a cow to average 6470 litres/year – all the extra from home-grown forage.

This takes the amount of milk produced from forage to 2775 litres, cutting the feed rate to 0.26kg/cow (0.27kg/cow last year).

However, those figures do not reflect the full position, says Paul Horsnall, manager of Bibbys Dairylink costings service. “The milk price averaged 21.3ppl in 1997. It looks set for another year of decline.”

Producers must be committed to producing milk at 20p or less a litre, says Mr Horsnall. Improved knowledge and control of fixed costs which account for well over half of all production costs is vital.

This months Milk Price Review monitoring April milk cheques for March deliveries shows how much prices fell compared with last year.

The few bonus payments made this year are included in the average price for the milk year. Companies include Aberdeen Milk (0.05ppl) and South Caernarvon (0.45ppl).

The Milk Group also paid out 0.05ppl as an interim bonus. The companys January share issue also added the equivalent of 0.15ppl on to the 1997/89 litreage (not included in the table). Woodgate Farms paid 0.06ppl on January-December 1997 deliveries.

Milk Marque and Scottish Milk are yet to announce any year-end profit distribution. “Even if one is paid it is likely to be small,” says Stephen Bates of Wye College. If that is the case, he predicts few, if any, dairy companies will bother matching it.

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