Dairy margins increase almost 25% in 10 years

Margins over purchased feed for conventional dairy herds have increased by 24.1% in the past 10 years, to £1,704/cow, according to the annual Kingshay Dairy Costings Focus Report.

Herds have also seen an increase in margins per litre, but at a more modest 14.3%, bringing the average to 20.33p/litre. Lower input grazing focused herds came out top on a per litre basis, at 22.69p/litre, but the year-round calving, housing focused systems produced the best margin over purchased feed per cow at £1,852/cow.

For the year-round calving, housing focused systems, there was a range in margins of £2,219 per cow for the top 25%, to £1,465 for the bottom 25% – a difference of £150,800 for a 200-cow herd.

“Margins increased despite rises in purchased feed costs, likely mitigated by increases in yield, milk from forage and milk price, but other costs of production, such as labour, will also have increased over that period,” Kathryn Rowland, senior farm services manager at Kingshay, explained.

“Compiling large data sets, alongside in-depth analysis, enables farmers and advisers to benchmark or see what they could be doing differently to make improvements to their system.

“What is really evident – especially with some milk contracts tightening – is the need to better utilise available forage and on-farm resources to lower costs. However, with fuel prices bottoming out in the past few months there may be some advantages to producers, even more so if this is reflected in the fertiliser value.

“The important thing to take on board is that any dairy system can be profitable, but it requires a focus on efficiencies across the board; from forage, to health, fertility and other inputs.”

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