By James Moules @DorsetEchoJames


West Dorset MP Sir Oliver Letwin has stressed the need to protect the livelihoods of dairy farmers as new figures reveal that dairy profits have fallen.

A survey by the Old Mill and Farm Consultancy Group showed that profits for dairy farmers dropped to 2.69p/litre (£141/cow) in the year to March 31 2019 from 5.9p/litre (£383/cow) the previous year. Forecasts only predict a marginal rise in the coming year.

Responding to this news, West Dorset MP Sir Oliver Letwin emphasised the need to support dairy farmers.

He said: "Current conditions are tough for our dairy farmers. This reinforces the need to avoid any actions that would make them tougher yet."

This sharp drop is attributed to an especially dry summer, which forced dairy farmers to buy extra feed for their livestock.

Andrew Vickery, head of rural services at Old Mill, added that the higher milk prices affect milk production.

He also said that spring-calving herds likely make more per litre than year-round calving herds.

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He said: "This is due to their ability to produce cheap milk, which insulates them against lower milk prices.

"However, spring calving herds had lower than average yields: As yields climb, a lower margin is needed to maintain profit per cow. The best farms carefully monitor the costs of producing marginal litres, to pre-empt those margins getting squeezed.

"The average comparable farm profit for the top 10% was 12.13p/litre compared to a loss of 6.46p/litre for the bottom 10%. They spent £285 less on concentrates, and £34 more on forage, indicating a choice to plug the gap in home-produced forage with purchased forage rather than higher cost concentrates."

He adds that, in spite of assessment that a better summer could improve the situation for next year, Brexit means that there are arguably more uncertainties now than last year.

Phil Cooper of the Farm Consultancy Group attributes the greater costs last year to drought.

He said: "Most of these costs are budgeted to be reversed this year, but it still leaves only £76,400 for this 2.1 million litre average dairy farm to cover rent, debt finance and repayment and taxation on a 30p/litre milk price.

"It has been a challenging year, and many farms are sitting around the break-even point, with a need to rebuild profitability next year. Producers should now have enough information to budget accurately for the coming six months, and must act quickly to put their businesses on a sound footing no matter what Brexit throws at them."

Originally published in the Dorset Echo

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