Dairy farmers’ profits recovered in 2017/18 as milk prices returned to more sustainable levels – but the outlook for 2018/19 is far less buoyant.
A recent survey by accountants and financial planners Old Mill has revealed that Old Mill and Farm Consultancy Group (FCG) clients made a profit from milk of £86/cow in the year to March 2018, compared to a loss of £253/cow in 2016/17.
When taking non-milk income, such as calf and cow sales, into account – but not including rent, finance or the single payment - the average farm profit was £383/cow in 17/18 against just £19/cow the previous year.
“Compared with 16/17, any year was going to have to be an improvement if dairy farmers were going to survive,” says Mike Butler, chairman of the board at Old Mill. “As it turned out, the 17/18 survey shows a much-needed return to profits for the majority of farms in the survey.”
However, the pendulum has already started to swing the other way, with a sharp increase in the cost of production likely to erode margins in 18/19. “The full effect of this year’s wet spring and dry summer will not be known until we get well into 2019,” says Mr Butler. “Only then will we know how tight winter fodder volumes are, how much supplementary feed is needed, and how well milk producers can maintain output under these challenging conditions.”
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A recent survey by accountants and financial planners Old Mill has revealed that Old Mill and Farm Consultancy Group (FCG) clients made a profit from milk of £86/cow in the year to March 2018, compared to a loss of £253/cow in 2016/17.
When taking non-milk income, such as calf and cow sales, into account – but not including rent, finance or the single payment - the average farm profit was £383/cow in 17/18 against just £19/cow the previous year.
“Compared with 16/17, any year was going to have to be an improvement if dairy farmers were going to survive,” says Mike Butler, chairman of the board at Old Mill. “As it turned out, the 17/18 survey shows a much-needed return to profits for the majority of farms in the survey.”
However, the pendulum has already started to swing the other way, with a sharp increase in the cost of production likely to erode margins in 18/19. “The full effect of this year’s wet spring and dry summer will not be known until we get well into 2019,” says Mr Butler. “Only then will we know how tight winter fodder volumes are, how much supplementary feed is needed, and how well milk producers can maintain output under these challenging conditions.”
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