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Dairy farm incomes to recover in 2018 after ‘dismal few years’

But accountants Old Mill warned it would take months, if not years, to repair depleted balance sheets.



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Dairy farm incomes to recover in 2018 #teamdairy

Dairy farm incomes are expected to recover in 2017/18 following a ‘dismal few years’, according to figures from Old Mill accountants and Farm Consultancy Group revealed at the South West Dairy Show.

 

In 2016/17, the average cost of production was 3.49ppl above the average milk price with non-milk income meaning the average farm profit was 0.28ppl.

 

With the average milk price expected to be 29ppl efficient businesses ‘should’ be able to generate a profit of about 3ppl.


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But farmers were warned it was important to continue to focus on becoming more efficient with the main differences between the top and bottom 10 per cent were higher feed, labour and machinery costs.

 

The average 2m litre producer was likely to see profits rise from £5,600 to £62,200 in 2017/18.

 

However, Mike Butler, chairman of the board at Old Mill, warned it would take months, if not years, to repair depleted balance sheets.

 

“Farmers need to plan carefully to retain as much profit in the business, with one eye to investing for the future in the most tax-efficient manner possible.”

 

Producers were also warned not to simply ramp up production as this would create another downward cycle in the future.

 

He added: “There is no perfect solution, but the more producers who understand that over-production will destroy their market, the greater the chance this precious industry has of maintaining a sensible level of profitability.”

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