Milk price slump takes £300 off dairy heifers

Loss-making milk prices across many segments of the sector are being felt in the dairy rings, with heifer averages at a three-year low.

National commercial dairy heifer averages slumped to £1,550 a head in September, according to figures from the AHDB and the Livestock Auctioneers Association.

This has been a £300 a head drop since the start of the year and a £200 drop since the height of the summer, reflecting how flying herds and those restocking are bidding to tighter budgets.

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

Auctioneers say the drop is understandable given the collapse in milk prices, with many base prices around 36p/litre. However, there is currently a huge variation in contracts.

Beef price support

Glyn Lucas, Harrison and Hetherington’s dairy sales manager and auctioneer at Borderway, stressed the dairy economy was not healthy, and the beef price and tightness of cattle supply was supporting the dairy trade.

“Replacement cost has been as small as it perhaps ever has been,” Mr Lucas told Farmers Weekly.

“Decent-framed Holstein cows straight out of the parlour are 130-140p/kg and a lot of herds are averaging £1,000 for their culls.”

Mr Lucas said this time last year pedigree sales averaged £2,800-£3,000 for fresh heifers, and commercial animals were £2,200-£2,300.

“Our last sale saw commercial heifers average about £1,850, so that is quite a difference.”

Severe consequences

Norton and Brooksbank’s Mark Lee said prices were back, but the “incessant demand” of the flying herd business model was keeping trade going.

He said there would be severe consequences to some dairying businesses if there wasn’t a positive movement in the milk price soon.

“Better heifers are still making a bit more than £2,000 a head, depending on pedigree, but generally good 35-litre heifers are in the £1,800-£2,000 region and about 10% less than they were.

“We deal with abattoirs, and they are all saying they’ve been inundated with cows now the weather has turned. You wonder how many dairy and suckler cows will be left in this country.

“It’s not all bad though – we have sourced cows for close to 30 new dairy herds this year, trying to help new businesses set up.”