Could dairy farmers be missing out on up to £55 million a year?

By Rob Blair, ARA specialist

The Agriculture and Horticulture Development Board (AHDB), which represents farmers, growers and others in the supply chain, has said that farmers could be missing out on £55 million a year in lost revenue by failing to meet requirements for butterfat and protein.

According to an analysis of the latest data for 2020/21, more than 40 per cent of the milk for the liquid market and 55 per cent for manufacturing did not meet butterfat target levels – leading to a loss of £38 million of additional income for farmers.

A further £17 million was missed by around 64 per cent of farmers on manufacturing contracts who fell short of target protein levels.

Although farmers on liquid contracts do not usually receive additional payments for surplus protein, they can incur costs from producing it. So, it is concerning that more than 40 per cent of milk destined for this market exceeded the typical base level of 3.3 per cent.

AHDB lead dairy analyst, Patty Clayton, says farmers need to work out a budget so that they can better understand whether the income generated by meeting targets is worth the costs.

She said: “Global demand for solids on the rise so, depending on your milk buyer, increasing milk solids is likely to be a positive long-term decision.”

Ms Clayton added: “At current payment rates, an all-year-round calver producing 1.5 million litres a year would generate £3,600 of additional revenue per year by increasing their butterfat content from 4.0 per cent to 4.1 per cent.

“This could be as much as £5,400 per year depending on your contract. It’s important for farmers to assess their individual circumstances and pricing schedules before making any decisions.”

A lot of factors can go into farmgate prices and so it is important that all farmers ensure their produce meets required standards and that they are not missing out on additional income by changing what they produce.

If you need help assessing the cost benefits of improving or altering your produce to achieve a higher price we can help. Speak to our team for the latest advice and analysis.