Gaurdian article - " battle for the soul of british milk"

bogman_bass

Interesting to see a non-farming perspecitive on this. The thing that really caught my eye though was the cost of production in the UK

the_syco

http://www.theguardian.com/uk-news/2014/oct/02/-sp-battle-soul-british-milk

This spring, led by Tesco, Britain’s major retailers embarked on a price war, slashing the price of a four-pint carton of milk from £1.39 to a barely credible £1. Some now charge even less.

Milk prices, meanwhile, have been plummeting. According to the agricultural consultancy Promar, the milk price at which dairy farmers broke even in 2013 was around 30p per litre. It estimates the current cost of production, for a typical dairy farmer supplying to Tesco, at about 31.5p a litre. Farm gate prices, which were up at a healthy 34p at the start of this year, have since fallen to far below that level. According to DairyCo, the very best milk contracts – so-called cost-of-production deals sealed directly between dairy farmers and supermarkets – are paying farmers 32p. The worst are paying 26p, as much as six pence per litre less than the cost of production. For the average UK dairy farmer, that represents £90,000 in lost revenue.

Brown Podzol

http://www.promar-international.com/_userfiles/pages/Promar%20Standard%20Single%20Page.pdf

Excerpt here of the costs that they include.


The cost tracker is based entirely on the businesses of the farmers who supply milk to Tesco. Promar farm secretaries visit the farms, collect the data, and provide each farmer with a set of Promar Farm Management Accounts (FBA). This has all the technical numbers of litres, kilos, acres, fertiliser analyses, stock and crops etc recorded for their whole farm, as well as all the financial transactions, and uniquely this is all fully reconciled to the bank statement. No processor, Tesco or anyone else, sees the individual farm data, as that would be wholly illegal under the Data Protection Act.
We then aggregate all of the farm data, and calculate their historic actual cost of milk production. This includes every cost area from feed to bank interest, from fertiliser to council tax, plus depreciation on the farm buildings and machinery.
To this we add a value for the unpaid family labour that most self employed farmers put into their farm. This is currently £51,033 for the average farmer in the sample who has about 190 cows. As it is a cost tracker it does not include any other income, from calves, cows, subsidies, other farm enterprises and so on.
The tracker itself is a budget for the next financial year based on this accurate base data, because the intention of the TSDG is to pay their farmers a current milk price that reflects current costs, something that is critical when input prices can rise so fast. This budget takes into account their volume of milk supply and all cost changes, as well as anticipated net capital spend by the farmers.

TossL1916

British dairy farmers are far too focused on yield/cow. Their cost of production isn't too far off double what a low cost producer here is doing. I feel sorry for them having to deal with the money hungry supermarkets but they are certainly doing themselves no favours

get_me_beer

TossL1916 wrote: »

British dairy farmers are far too focused on yield/cow. Their cost of production isn't too far off double what a low cost producer here is doing. I feel sorry for them having to deal with the money hungry supermarkets but they are certainly doing themselves no favours

much of the uk is just as good for growing grass as ireland is , better in some cases as it rains less if you exclude scotland , british farmers appear to have contempt for grass despite the countries tremendous ability to grow the stuff

might be down to the fact that countries with large populations require a year round supply of milk so most dairy farmers are liquid milk producers , uk is also densely populated so perhaps they need to focus more on what the cow produces rather than the hectare

Timmaay

get_me_beer wrote: »

much of the uk is just as good for growing grass as ireland is , better in some cases as it rains less if you exclude scotland , british farmers appear to have contempt for grass despite the countries tremendous ability to grow the stuff

might be down to the fact that countries with large populations require a year round supply of milk so most dairy farmers are liquid milk producers , uk is also densely populated so perhaps they need to focus more on what the cow produces rather than the hectare

The dense population also means more feed byproducts like brewery grain etc, which cost very little. But I agreed definitely, they are missing out by ignoring grass. On the all year around supply, very easy solution, have some farms block calf down in the autumn, tmr the cows indoors until Feb, then out to grass for the rest of their lactation. You'll still get your 3/4k litres of milk from cheap grass this way.