Dairy farmers missing out on millions

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Dairy farmers could be missing out on £55 million a year in lost revenue by not meeting milk buyer requirements for butterfat and protein.

AHDB analysis of the 2020/21 season shows over 40% of milk destined for the liquid market and 55% for manufacturing fell below target butterfat levels, resulting in farmers missing out on £38 million of additional income.

A further £17 million was lost by the 64% of farmers on manufacturing contracts who fell short of target protein levels.

Patty Clayton, AHDB lead dairy analyst said: “I’d encourage farmers to work out a simple budget to understand whether the income generated by increasing solids outweighs the costs.

“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.”

An assessment of a sample of milk delivered to buyers during the 2020/21 milk year showed over 40% of the milk destined for the liquid market was delivered with a butterfat level of less than the base level of 4%.

For milk destined for manufacturing, the typical base level for butterfat is slightly higher at 4.2%, and around 55% of the milk delivered for manufacturing fell below this. Meeting desired butterfat targets would have generated around £38m of additional income for farmers.

Farmers on liquid contracts do not typically achieve payments for surplus protein but may incur added costs to produce it. Despite this, over 40% of milk destined for this market exceeded the typical base level of 3.3%.

Manufacturers usually pay for milk delivered above a base value of 3.4% for protein. Around 64% of milk supplied missed this target, forfeiting an estimated £17m in payments.

“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% to 4.1%. This could be as much as £5,400 per year depending on your contract,” says Patty.

“It’s important for farmers to assess their individual circumstances and pricing schedules before making any decisions. Our handy checklist suggests the key steps to follow when thinking about making changes that will increase constituents.”

Farmer checklist to increase milk solids from dairy cows

– Use AHDB’s Milk Price Calculator to see how changes to constituents affect your milk cheque
– Review your feeding approach and ration with your nutritionist or vet
– Work out a partial budget to see whether the costs to increase solids outweigh the additional revenues
– Longer-term, breed from bulls who are likely to pass higher constituent genetics to cows. AHDB’s Herd Genetic Report allows you to see your herd’s strengths and weaknesses and make informed breeding decisions.

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