Raising milk output can hold up income

By Farmers Weekly staff

PROFITS on dairy farms costed by Genus subsidiary Promar International have stayed at last years level of 12,500 for a 128-cow herd, despite a further fall in milk prices.

Presenting the results at this weeks European Dairy Farming Event, national finance consultant Tim Archer said farmers had maintained income by increasing production and cutting costs.

Output had risen both in yield a cow and through increasing herd size, compensating for the fall in milk price.

But even with 100 worth of variable cost savings, gross margin had fallen by 300 a cow, he said.

Margin a litre now stands at 9.4p, compared with 14.9p in 1995/96.

Overhead savings helped. There was a big reduction in wages in the past year, and office costs for accountants and consultants have also been cut, said Mr Archer.

But this short-term thinking could come back to haunt producers, he warned.

Capital investment in businesses also showed a decline, as did private drawings and net worth.

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