Production costs under the spotlight as British dairy farm profits halve

Mr Vickery said: “The average comparable farm profit for the top 10 per cent was 12.13ppl compared to a loss of 6.46ppl for the bottom 10 per cent.

“They spent £285 less on concentrates, and £34 more on forage, indicating a choice to plug the gap in home-produced forage with purchased forage rather than higher cost concentrates.”

Profitability

Looking ahead to the 2019/20 milk year, likely higher yields and lower feed costs were expected to boost profits by 0.71ppl.

“But given Brexit, there are arguably more uncertainties over profitability now than at the same point last year,” Mr Vickery said.

He said a weaker pound will prop up prices to some extent but its impact on imported inputs was only partly being offset by lower domestic grain prices.

Phil Cooper at the Farm Consultancy Group added many of the cost increases last year were down to drought and were expected to be reversed this year.

“It has been a challenging year, many farms are sitting around the break-even point, with a need to rebuild profitability next year,” he said, adding producers should have enough information to budget for the next six months and needed to ‘act quickly’ to put their business on a sound footing.