Dairy farmers to lose 2.81ppl in 2016-17

DAIRY farmers are set to lose 2.81ppl in 2016-17, according to farm accountant Old Mill.

Despite milk price increases, low returns and higher production costs mean dairy farmers will lose 0.1ppl more than last year.

It comes after 3,581 UK farmers applied for the first period of the EU milk production reduction scheme. The scheme pays farmers 12p for every litre reduction.

Old Mill calculated milk prices averaged 26.50ppl in 2016-17, compared to production costs of 29.31ppl.

However, when non-milk income such as calf and cow sales was included, producers averaged a profit of 1.08ppl.

The figures also show a marked difference between the top and bottom 25 per cent of producers with the top 25 per cent making profits of 8.75ppl while the bottom quarter made a loss of 5.65ppl.

Tough times

Andrew Vickery, head of rural services at Old Mill, said: "It’s encouraging to see that, even in these tough times, the UK’s top dairy farmers are still managing to make a profit.

"All producers have looked hard at their cost base and found ways to reduce expenditure. However, while many have improved efficiencies, there is now very little meat left on the bones for any further cost reductions."

Phil Cooper, partner at the Farm Consultancy Group, said milk yields had dropped back as farmers fed less concentrates over the summer and were likely to remain suppressed over the winter due to the lower energy silage.

"Feed costs in 2016-17 are expected to increase by 0.72ppl due to the weaker pound, but farm maintenance costs are set to remain low as businesses put off expenditure until milk prices improve," he said.