UK dairy farmers could be missing out on millions

By Jim Cornall contact

- Last updated on GMT

UK dairy farmers could be missing out by not meeting milk buyer requirements for butterfat and protein.
UK dairy farmers could be missing out by not meeting milk buyer requirements for butterfat and protein.

Related tags: AHDB, Milk

UK dairy farmers could be missing out on £55m ($75m) a year in lost revenue by not meeting milk buyer requirements for butterfat and protein.

This is according to the Agriculture and Horticulture Development Board (AHDB), the levy board that represents farmers, growers and others in the supply chain.

The AHDB said its analysis of the 2020/21 season shows more than 40% of milk destined for the liquid market and 55% for manufacturing fell below target butterfat levels, resulting in farmers missing out on £38m ($51.6m) of additional income.

A further £17m ($23m) 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 more than 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, 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, the AHDB said, forfeiting an estimated £17m in payments.

“At current payment rates, an all-year-round calver producing 1.5m liters a year would generate £3,600 ($4,890) of additional revenue per year by increasing their butterfat content from 4.0% to 4.1%. This could be as much as £5,400 ($7,340) per year depending on your contract,”​ Clayton said.

Related topics: Markets, Fresh Milk, Pricing Pressures

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