Farms missing out on millions
DAIRY farmers in the region could be missing out on their share of £55 million a year in lost revenue by not meeting milk buyer requirements for butterfat and protein, according to the findings of a new study.
Analysis of the 2020/21 season carried out by the Agriculture and Horticulture Development Board (AHDB) shows that 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 in revenue 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 is 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 £38 million 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, more than 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 £17 million in payments.
“At current payment rates, an allyear-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,” Ms Clayton said.
“It’s important for farmers to assess 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.”
Farmers wanting to increase milk solids from dairy cows are being advised to use the AHDB’s Milk Price Calculator to see how changes to constituents affect their milk cheque, review their feeding approach and ration with a nutritionist or vet, and work out a partial budget to see whether the costs to increase solids outweigh the additional revenues.