UK dairy counts cost of farm labour
majority of UK dairy farmers are subsidising the cost of a pint of
supermarket milk by nearly 4p per litre by failing to include
family labour costs in their accounts, Tom Armitage reports.
The survey, which involved five hundred British dairy farms with an average herd size of 156 cows and a yield of 7,112 litres per year, determined that the average cost of family labour required to run an average size dairy business amounted to £42,241 (the equivalent to £271 per cow or 3.81p per litre) per year - and on farms with smaller herd sizes, the labour input rose considerably.
On a farm with 100 to 200 cows, for instance, the cost of family labour, together with hired labour, could amount to increases of 5.5p to 6p per litre respectively.
In addition, the report suggested that the domestic dairy industry was still heavily reliant upon family-based labour, with the average dairy farmer working a 57-hour week (conversely the average UK working week is 37.5 hours), while 64 per cent of spouses and 42 per cent of sons or daughters were also directly involved in the day-to-day running of the business.
"We had been concerned in the past about statements saying producers could make a profit and have sufficient cash to re-invest at a milk price as low as 16p per litre," commented RABDF chairman, Tim Brigstocke.
"The Association investigated those figures and found that the crucial value of labour had not been recorded in the accounting process, therefore farmers themselves were subsidising the real cost of production," he added.
But despite repeated suggestions that the British agricultural sector is debt-ridden and in crisis, John Kinnaird, president of Scotland's National Farmers Union (NFU), rebuffed a Scottish Executive forecast that claimed farm incomes would fall by almost 50 per cent over the coming year, claiming that farmers' incomes are actually more stable than statistics would suggest.
And although Kinnaird stopped short of giving an overly optimistic view, he suggested that tighter cost-control measures had helped many Scottish farmers offset rising fuel costs and falling farmgate prices.
Meanwhile, another report from the UK's Department for Environment, Food & Rural Affairs (DEFRA) found that a further 48 per cent of full-time British farmers have diversified away from agriculture in the past year.
According to the Farm Business Survey, English farmers raised approximately £300 million from diversification into areas such as tourism and sports and recreation, while the average UK farm raked in additional earnings of £5,000 last year - bringing the total number of British farming households receiving income through diversification to 62 per cent.
In recent years, falling farming incomes (last year the UK's £3 billion farming industry fell by 5.4 per cent) has led DEFRA to offer farmers a number of financial incentives, including the Rural Enterprise Scheme (RES), in an attempt to encourage farmers to diversify.
"Since October 2000, the government has awarded over £34 million in grants through the RES to help farmers branch out, gain important extra income, and boost the rural economy, commented Lord Whitty, food and farming minister.
