Costed dairy herds show massive slump in margin

Margin over purchased feed (MOPF) has slumped by £79,000 in the year to the end of July for herds costed in The Dairy Group’s MCi series.

At 18.4p/litre, the MOPF was down 25% on July 2014 and subsequent milk price cuts will have brought it down further.

The average milk price of 24.7p/litre was 7p/litre or 22% lower than the previous year. The impact of this on the margin would have been even greater, had feed costs not also fallen by 0.8p/litre.

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“MOPF is a very good barometer of dairy herd profitability as it tracks two key benchmarks of milk price and purchased feed cost,” said Ian Powell, director of The Dairy Group consultancy.

“Milk revenue makes up 90% of the dairy enterprise revenue and purchased feed cost about 25% of total costs.”

Although the winter feeding period about to start, there was scope for some to improve the feed rate or cost, with a wide range of both rates and feed prices seen between herds.

“Dairy margins will continue to fall over the coming months as the higher margin months from last year are replaced with lower monthly margins this year”
Ian Powell, The Dairy Group

However he acknowledged that none of this was easy.

“Dairy margins will continue to fall over the coming months as the higher margin months from last year are replaced with lower monthly margins this year.

“Winter diets should aim to fully use home-grown feed and to balance rations for energy and protein at the least cost to achieve optimum performance with good rumen function,” said Mr Powell.

About 150 English and Welsh dairy herds are included in the MCi series, with an average herd size of 233 cows.

Milk prices for these herds ranged from 19 to 32p/litre.

 MCi dairy margins