Low cost most profitable in dairy
DAIRY farmers will need to focus on profitability as opposed to output to ensure maximum returns when the sector continually has to battle high input costs and demand remains weak in the main importing nation of China.
While GB milk prices ‘overshot’ world markets through 2022, Andersons Centre partner Michael Haverty said there was a big ‘correction’ through 2023, when values fell and as yet, have not aligned back with EU and global values.
Add to that higher variable costs and he said the cost of production for milk is more than it should be. “There can now be little doubt that the liquid sector, once seen as the premium outlet for milk has much to answer for in encouraging week ending 16/03/2024 (p per dwkg) systems of milk production that are generally much higher cost.
“Level supply, longer housing periods, less reliance on grazed grass and higher cost in terms of labour and power requirements are all legacies of the liquid milk market,” said Mr Haverty.
“Our most profitable clients are those practicing low cost, medium output, grazing-based systems with the yield from forage at less than 4000litres. Other key characteristics include block calving, autumn, spring or both, cross-breeding to enhance milk solids and an absolute focus on cost control.”
However, he added that the company’s Scottish version of Friesian farm,. a 130ha holding in central Scotland with 200+ milking cows, growing some maize, is more
DEADWEIGHT CATTLE IN SCOTLAND
positive for the 2023/24 season, albeit dependant on how far milk prices recover, see table.
Figures from the past two decades show that margin from production has not changed much and has been consistently in the 0-3p per litre, with an average of just 1ppl over the entire period.
In conclusion, Mr Haverty said that while milk prices have historically been erratic, the sector has some big challenges to face around sourcing good labour and the requirement for capital investment. There are opportunities to do things differently, thereby lowering production costs in the sector. These include improved forage production, reduced fertiliser and making better use of slurries and manures.
PIGS IN SCOTLAND
week ending 16/03/2024
SHEEP IN SCOTLAND
week ending 13/03/2024