Dairy margins hit six-year low
© Tim Scrivener Dairy farmers’ average margin over purchased feed fell in July to its lowest level since April 2010, according to the latest figures from The Dairy Group.
The drop was largely down to average milk prices falling 3.9p/litre on last year, to 20.8p/litre, representing a 16% fall.
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This more than offset the 0.7p/litre reduction in purchased feed costs. As a result, the margin over purchased feed (MOPF) fell to 14.8p/litre – 20% down year on year.
There was little change for average butterfat content, which was up 0.03% to 3.96% and protein constituent content, down 0.04% to 3.22% on the same period last year.
| Monthly results | 12 months rolling | |||
| July 2016 | July 2015 | July 2016 | July 2015 | |
| Dairy milk yield/cow | 24.4 | 26.7 | 25.9 | 26.3 |
| Daily milk yield from forage/cow | 8.2 | 8.7 | 2,810 | 2,628 |
| Cows in herd | 213 | 222 | 213 | 233 |
| Annual milk yield/cow (litres) | 636 | 682 | 8,075 | 8,190 |
| Milk price/litre | 20.8 | 24.7 | 23.4 | 27.7 |
| Butterfat (%) | 3.96 | 3.93 | 4.13 | 4.03 |
| Protein (%) | 3.22 | 3.26 | 3.31 | 3.31 |
| Concentrates cost per tonne (£) | 183 | 205 | 194 | 216 |
|
Concentrates use per cow (kg) |
191 | 209 | 2,578 | 2,789 |
| Concentrates use per litre (kg) | 0.29 | 0.30 | 0.32 | 0.34 |
|
Purchased feed costs per cow (£) |
37 | 44 | 531 | 631 |
| Purchased feed costs per litre (pence) | 5.8 | 6.5 | 6.6 | 7.7 |
| Margin over purchased feed per cow (£) | 95 | 126 | 1,358 | 1,646 |
| Margin over purchased feed per cow (pence) | 14.8 | 18.4 | 16.8 | 20.1 |
| Margin over all feed (£/cow) | 75 | 107 | 1,082 | 1,403 |
Despite farmgate milk prices beginning to creep upwards following 30 months of decline, producers are still paid 4.4p/litre below the average cost of production.
“For our average costed herd the 12-month rolling MOPF reduced from £1,646 a cow in July 2015 to £1,358 in July 2016, which was a fall of £288 a cow and similar to the previous low of £1,340 a cow in April 2010,” said director Ian Powell.
Following 30 months of milk price declines, the rolling milk price in July for these herds costed by The Dairy Group was down to 23.4p/litre – 7p/litre below the average cost of milk production.
Winter pressure
He added, “Milk revenue makes up 90% of the dairy enterprise revenue and purchased feed cost about 25% of total costs.
“We are approaching the start of the more expensive winter period with the price of purchased feed likely to increase, which will put continued pressure on dairy margins over the coming months.”