Dairy producer numbers hold despite low milk prices

The number of GB dairy producers was estimated by the AHDB to be 7,500 in October, remaining level with its April figure.

This came as a surprise to industry pundits, with farmgate milk prices having fallen by about 30% since the beginning of the year and dropping below the cost of production for many dairy farmers.

The number of producers in October was still down 4.5% compared with October 2022, with 350 fewer recorded.

See also: Losses build for dairy producers after further price cuts

Milk processors have said they had some producers leave back in March and April, when prices first started to fall from previous highs.

A number of herd dispersal sales have taken place during the past year, and many farmers have reportedly cut back production to reduce costs.

This can be seen in the figures, with UK milk deliveries running 3.3% below the same week last year.

Meanwhile, average milk production per farm has increased on the year as individual herds grow in size.

AHDB lead dairy analyst Susie Stannard told Farmers Weekly there was a significant decline in producers on the year, so it may be that there was a trigger between October 2022 and April of this year.

Ms Stannard said: “Winter is a difficult time for many and, with cull cow prices being very high in that period, it may have given some the impetus to disperse their herds and change direction.

“It could have then stabilised over the summer given that input costs have been falling, albeit some remaining at high levels, and forage has been readily available due to excellent grass growth.”

Outlook

There are some signs of optimism, with milk futures forecast above 40p/litre, and the actual milk price equivalent making gains each month.

However, milk volumes are forecast to increase during early 2024 in the build-up to the spring flush, which is likely to limit any significant price rallies.

Ms Stannard said more dairy farmers could exit the sector in the next six months if prices continue at low levels.

“There is also an element of ‘wait and see’ in farmers’ mentalities. Some farmers built up a reasonable cushion while prices were very strong to tide them through a bad patch. These guys are biding their time in the expectation that the commodity cycle will roll on and prices will bounce back.

“We are already seeing early signs of prices beginning to recover, which will have delivered extra hope,” she said.