Dairy Incomes in England Plummet Amid Falling Milk Prices
Source: DairyNews.today
Dairy farm incomes in England fell sharply during the 2023/24 fiscal year, reflecting a challenging period across all farm types, according to the UK government’s latest Farm Business Income Statistics.
The data, covering average profits by farm type, revealed that dairy farm business income dropped 68% year-on-year to an average of £70,900, following two years of strong performance.
Milk Prices and Rising Costs
The dramatic decline was largely attributed to falling milk prices, compounded by rising input costs, with variable and fixed costs up by 3% and 11%, respectively. However, the government highlighted significant variability, with some farmers receiving much higher prices than others.
The £70,900 average dairy income was broken down as follows:
Agriculture: £34,700 from core farming activities
Basic Payment Scheme (BPS): £17,700
Agri-environment schemes (AAE): £8,200, down 14% from 2022/23
Diversified income: £10,400, down 25% due to weaker performance in food processing, retail, and rental activities
Despite the decline, dairy farmers fared better than cereal farms, which recorded an average income of £39,400, and lowland grazing farms at £17,300. Notably, cereal, lowland grazing, and upland grazing farms recorded average losses from core farming activities.
Income Disparities
The report underscored wide disparities in the dairy sector's performance. Nearly a quarter of dairy farmers (23%) operated at a loss, and 12% earned less than £25,000 annually. Meanwhile, 30% achieved incomes above £100,000, with another 6% earning between £75,000 and £100,000.
The reliance on the Basic Payment Scheme, which accounted for 40% of dairy profits, raises concerns as the subsidy is set to be phased out over the next three years. This reduction is expected to eliminate approximately £20,000 from the average dairy farm's income.
Diversification and Agri-Environment Income
The statistics highlighted the growing importance of diversified income streams, though declines were evident across multiple sectors, including dairy, pigs, poultry, and horticulture. Agri-environment income rose across most farm types, except horticulture, with dairy farms averaging £8,200—lower than the overall average of £10,600 across all sectors.
A Call for Policy Action
The Country Land and Business Association (CLA) described the data as a "sobering reality" for policymakers.
“The results indicate the increasingly risky operating environment and year-to-year volatility that many farming businesses face, as well as the widening performance gap between sectors,” the CLA said.
To address these challenges, the government is formulating a long-term strategy to ensure a profitable, sustainable farming sector while bolstering national food security.
At a recent conference in London, Environment Secretary Steve Reed unveiled a 25-year roadmap for agriculture, aimed at enhancing profitability and creating fairer supply chains. The roadmap, alongside ongoing data analysis, is expected to inform future policy decisions to stabilize the sector and foster resilience.
Milk Prices and Rising Costs
The dramatic decline was largely attributed to falling milk prices, compounded by rising input costs, with variable and fixed costs up by 3% and 11%, respectively. However, the government highlighted significant variability, with some farmers receiving much higher prices than others.
The £70,900 average dairy income was broken down as follows:
Agriculture: £34,700 from core farming activities
Basic Payment Scheme (BPS): £17,700
Agri-environment schemes (AAE): £8,200, down 14% from 2022/23
Diversified income: £10,400, down 25% due to weaker performance in food processing, retail, and rental activities
Despite the decline, dairy farmers fared better than cereal farms, which recorded an average income of £39,400, and lowland grazing farms at £17,300. Notably, cereal, lowland grazing, and upland grazing farms recorded average losses from core farming activities.
Income Disparities
The report underscored wide disparities in the dairy sector's performance. Nearly a quarter of dairy farmers (23%) operated at a loss, and 12% earned less than £25,000 annually. Meanwhile, 30% achieved incomes above £100,000, with another 6% earning between £75,000 and £100,000.
The reliance on the Basic Payment Scheme, which accounted for 40% of dairy profits, raises concerns as the subsidy is set to be phased out over the next three years. This reduction is expected to eliminate approximately £20,000 from the average dairy farm's income.
Diversification and Agri-Environment Income
The statistics highlighted the growing importance of diversified income streams, though declines were evident across multiple sectors, including dairy, pigs, poultry, and horticulture. Agri-environment income rose across most farm types, except horticulture, with dairy farms averaging £8,200—lower than the overall average of £10,600 across all sectors.
A Call for Policy Action
The Country Land and Business Association (CLA) described the data as a "sobering reality" for policymakers.
“The results indicate the increasingly risky operating environment and year-to-year volatility that many farming businesses face, as well as the widening performance gap between sectors,” the CLA said.
To address these challenges, the government is formulating a long-term strategy to ensure a profitable, sustainable farming sector while bolstering national food security.
At a recent conference in London, Environment Secretary Steve Reed unveiled a 25-year roadmap for agriculture, aimed at enhancing profitability and creating fairer supply chains. The roadmap, alongside ongoing data analysis, is expected to inform future policy decisions to stabilize the sector and foster resilience.
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