UK Dairy Farmers Reported Record Margins Before Prices Fell

Data from Kingshay’s Dairy Costings Focus Report showed that average output from conventional Holstein and Friesian herds rose by 6% year on year to 8,848 litres per cow. Margin over purchased feed increased by 3% to £2,708 per cow, while the milk-to-feed price ratio reached 1.40, its highest level since 2006.

Farmers used more concentrate feed during the period, with average consumption rising by 4% to 2,997kg per cow. Milk produced from forage increased by 9% to 2,652 litres per cow. Butterfat and protein content also improved.

Kingshay said the stronger margins were being reduced by higher spending on labour, machinery, fuel and fertiliser. Emma Puddy, a farm-services specialist, described the margin improvement as “much needed” to help offset other increases in dairy-production costs.

Energy-market disruption associated with geopolitical tensions affected farm expenses. Red diesel rose from 75p per litre to 118p in April, then fell to 91p by July. The price of bagged ammonium nitrate increased from £402 per tonne in February to £529 in April before easing to £439 by July.

Employment costs also rose. Kingshay estimated that hiring a senior skilled worker cost £19.99 an hour after National Insurance and pension contributions, 44% more than five years earlier. Falling milk prices added pressure to farmgate returns after the stronger opening to the financial year, which Kingshay characterised as a year divided between record production and favourable prices followed by weaker returns and higher costs.

Average herd-health spending was £30,307, compared with £16,907 among the top-performing 25% of farms in the dataset. Kingshay identified lameness, mastitis and abortions among the issues associated with the expenditure. Drought affected forage availability before wetter winter weather arrived. Richard Simpson, Kingshay’s development director, said some producers would have used the earlier margins to withstand the subsequent downturn.