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High cull cow prices are encouraging dairy farmers to reassess their future, with some taking the opportunity to leave the industry. Milk production holds up despite fewer producers

• Farmers consider future in milk

• High costs affect dairy prospects

• Milk output is still relatively flat

High cull cow prices are encouraging dairy farmers to reassess their future, with some taking the opportunity to leave the industry.

There were 7,500 dairy producers in Great Britain as of April this year, according to the most recent survey of major milk buyers by the Agriculture and Horticulture Development Board. This represents a 4.8% fall in the number of farmers over the past year.

Feed costs

“Compared to previous years, more producers have left the industry,” said AHDB analyst Tom Price. “Despite the fact that the latest Agricultural Price Index indicates input cost inflation has eased, input costs remain historically high.”

As with many inputs, inflation for compound feed, for example, has remained flat since peaking last  summer. Compound feed costs remain some 26% above the level from this time last year and 47% higher than in 2021.

“Combined with falling milk prices, this has squeezed profit margins for many dairy farmers. The current high level of cull cow prices, as well as ongoing uncertainties about changes to agricultural subsidy schemes has led to some producers changing their future direction.”

Despite producer numbers dropping over the last 12 months, good weather conditions last autumn and higher milk prices at the end of last year meant that average milk production per farm remained high over the autumn and winter months.

Output figures

Farmgate milk prices have since fallen – in some cases below 40p per litre. But the latest AHDB figure suggesting that the average British dairy farm produces 4,500 litres of milk daily, equating to some 1.65mn litres per year.

GB milk production was estimated at 1,098 million litres in April – slightly less (-2%) than forecasted deliveries and 0.4% more (4.0m litres) than the same month last year. Daily deliveries averaged 36.59m litres daily during the month.

The year-on-year growth which has been seen since September, however, slowed. Falling farmgate prices contributed to the relatively flat volumes. Monthly daily deliveries for April were 0.2% (2 million litres) less than the five-year average for April.

Continuing unseasonably cool and wet weather in April further suppressed volumes with a delayed or below average flush. Ongoing pressure on farm margins will not help, said the AHBD, How this develops will be a key impact on production this season.