Profitability up but UK dairy farmers’ profits only tell half the story

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The dairy herd has been out at grass since January.
New Delhi, November 06, 2018: According to Promar’s latest Farm Business Accounts, average dairy farm profits were £96,318 for the year ending March 2018, up from £53,130 a year earlier.

This was driven by a 2.86ppl average 12-month milk price increase, improved yields per cow, an increased herd size and average feed use staying level.

But Promar’s figures show, after drawings and tax, repayments of loans and net capital spend, businesses were left with a deficit of £85,152 before any new debt was introduced.

Nigel Davies, national consultancy manager at Pro mar, highlighted some of the differences between top performing farms and the average, with smaller herds, higher yields and better concentrate efficiency according to fginsight.com.

“Very little is to do with milk price. There is 0.1ppl difference between them,” he said.The top farms also had better cow health with lower replacement rates and better fertility performance, as well as lower bedding costs, feed costs and dairy sundries costs.

Wages, power and machinery, property and debt per cow were also lower.

“They are able to spend £236 per cow more. They have the ability to reinvest back into the business for future efficiency.”

Looking forward, Promar expected profit after depreciation to be under £40,000 for the year ended March 2019.

Issues for the years ahead included Brexit, the trade war between the US and China and its potential impact on economic growth, exchange rates and labour availability and an increasing number of significant weather events.

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