September 8, 2010
 

Dairy farmers in UK face higher feed costs

 

 

Following a surge in the price of feed grain and poor silage crops this year, British dairy farmers are facing a significant increase in feeding costs.

 

Higher prices should compensate those with cost-based contracts to sell their milk to the major retailers but others may consider their future in the industry with an exodus of farmers, which has lasted for decades, seen continuing.

 

David Cotton, chairman of the Royal Association of British Dairy Farmers (RABDF), said the higher feed costs would add about two pence per litre to the cost of producing milk.

 

"Grain prices have shot up to GBP160 (US$245) a tonne from GBP100 (US$153) and the issue with silage is most people haven't enough ...so it will increase feed costs for the winter," he said.

 

Grain prices have climbed sharply in the last couple of months with the rise driven mainly by a severe drought in the Black Sea region, which threatens to turn key exporter Russia into a significant importer during the current season.

 

A heat wave in Britain earlier this year also stalled grass growth. Yields on a first grass cut to make grass silage to feed dairy cows were down 20-30% in early June and as much as 50% in a second cut in late June.

 

The price farmers receive for their milk in Britain varies widely from around 17 pence per litre to 32 pence, Cotton said, adding every one pence change to the price was worth GBP7,500 (US$11,494) for an average 100 cow herd.

 

"There is a great deal of variation in milk prices that farmers are getting, more than we have ever seen," said Euryn Jones, National Agricultural Specialist for Barclays Bank PLC.

 

The number of dairy farmers in Britain has been declining for decades with herd size rising. RABDF's Cotton said he expected to 4-5% to quit this year.

 

"I think the trend will continue although you will eventually get to a point where it will slow down," RABDF's Cotton said, adding those remaining had larger herds.