Milkminder men recoup half 98 milk price fall

By Robert Harris

BETTER management helped dairy farmers recover almost half the losses caused by last years fall in ex-farm milk prices, according to latest Axient figures.

In the year to March, the average milk price fell from 20.13p to 19.17ppl, a 4.8% drop, says information services manager Tim Harper.

“The direct effect would have led to a £15,411 loss in milk income for the average herd,” he said.

“However, through management improvements, Milkminder clients have recouped 44% of this resulting in a fall in herd margin of only £8568.”

With 107 cows, the average Milkminder farm had an extra four cows in milk, boosting herd margin by £3255.

Milk yield was also up almost 1 litre/day at 22.6 litres, giving clients an additional £1055.

Yield from forage slipped by 1.19 litres a cow a day which, coupled with the higher milk output, saw concentrate use rise by 15% to 0.31kg/litre over the 12 months.

This meant herd margins fell by over £1450 but was outweighed by a 13% drop in the average concentrate price to £109/t, saving almost £3900.

Further falls in feed prices can be expected following Agenda 2000 reforms which have cut cereal support prices, adds Mr Harper.

“The most immediate issue facing milk producers is the continued pressure on their incomes as a result of the continued fall in milk prices.

“Benchmarking performance against the best performing farms will help farmers to identify key areas where profitability can be improved.”

The severity of the downturn in dairy farmers fortunes is highlighted in the latest ADAS Milk Cheque results which show income cuts of more than £51,000 for costed herds in the past two years.

Milk values have fallen almost 25% in that time, by 5.75ppl, leaving many producers making a loss. Further falls in the milk price, which stood at 19.14ppl in March, will continue to depress profits for the coming year, says Milk Cheque manager Ian Powell.

With commodity and support prices based in the weak Euro, the position for dairy farmers looks bleak.

“Farmers must take action now to protect their businesses,” said Mr Powell.

“We are already witnessing a dramatic rationalisation of the industry ” if the situation remains unchecked, this is likely to continue apace.”

The top 10% of ADAS costed herds achieved a margin over purchased feed for the year to March of £1475 a cow, £372 above the average.

This was worth £49,000 a year. Even allowing for the extra cost of quota leasing, it left a net gain of £32,000, he says.

“With quotas assured for the next seven years, feed costs at an all time low and reduced finance charges there is potential for those farmers that act now to take advantage of the opportunities.”