25 September 1998
Worse to come, Axient warns dairy farmers
By FWi staff
DAIRY consultants Axient this week warned that worse was still to come as they announced the drop in profits experienced by many of their dairy farmers.
Speaking at the European Dairy Event at Stoneleigh, Warwickshire, director Tom Kelly predicted that, with about 1500 dairy farmers leaving the industry every year, there would only be 21,000 producers left by 2000. “Many of these farms have under 50 cows and many are left with no alternative but to leave milk production altogether.”
On an average-sized dairy farm, profits will be down by £14,000 in 1998, predicted Ross Danby, Axient marketing and information manager. The bottom 25% of dairy farms are the ones that will be hit the hardest as their profits plummet from £11,000 in 1997 to just £3000 in 1998, he added.
Mr Danby pointed out that these profits still had to cover private drawings, tax and capital investment.
Borrowings were surprisingly not as high as might have been expected, with the top 25% of dairy farms only increasing borrowing by £5000 on average. Average dairy farms increased borrowing by £11,000, as did the lowest 25%.
Axients top farms continued to make as much profit as a percentage of turnover as they did four years ago. Mr Danby put this down to yields being up by 494 litres over the past two years. More efficient use has been made of concentrate as consumption has only increased by 18kg, or 460 litres more, from forage.
When cutting costs, farmers have only power, sundries and labour left to work on, and even these, Mr Kelly said, had been cut to a minimum. To look to the future, he recommended that farmers should produce more milk, persist with genetics and analyse feed costs and systems.