Fears the exodus of dairy farmers could accelerate
AS of April 30, the Agricultural and Horticultural Development Board (AHDB) released figures indicating that the total number of dairy farmers in Great Britain had fallen by 4.1% during 2020/21, dropping from 8,380 on 1st April 2020 to 8,040 on 1st April 2021.
This represents approximately one dairy farmer leaving the industry per day which is a sobering statistic, although those farmers remaining will be pleased to see milk prices are firming at present with price rises recently announced by several milk buyers including Arla, Barbers and Muller.
Despite the number of farmers falling, this is having limited impact on milk production because the average output per farmer has risen over the last year from 1.5m litres per annum to 1.56m litres. This is despite the cold and dry weather which has constrained milk production in recent weeks, just as one would normally expect a “spring flush” of milk.
Chris Gooderham, AHDB head of specialist marketing, said the farmers who quit in 2020 were likely to have been those who supplied the food service sector, which collapsed in the early phase of the Covid-19 restrictions.
However, Covid-19 is certainly not the whole story. Dairy farmers have been leaving the industry in significant numbers for many years and the exodus does not seem to be slowing significantly.
This is illustrated by the fact that in 2002, the number of dairy farmers in England and Wales totalled around 19,000 and as can be seen from AHBD figures above, these numbers have more than halved in only 20 years.
The volatility of milk prices and the significant capital investment required in buildings and equipment on a modern dairy farm are significant factors contributing to the fall in number of dairy farmers.
Further, it seems likely that with increasingly stringent rules on slurry storage and air, soil and water quality that the pressure on dairy farmers will increase resulting in the need for additional capital investment.
The level of investment required will be the catalyst for yet more dairy farmers to leave the industry.
Thus, the gentle exodus of farmers is expected to continue and perhaps accelerate, leaving those who wish to remain having to be committed to continued capital spend and more than likely increased milk production per farm to remain competitive.