November 28, 2011

The lowest costs of milk production in Europe have been achieved by UK dairy farmers, according to DairyCo.

The European Dairy Farmers cost of production comparison 2011 put the average UK production cost at GBP0.27 (US$0.42) per litre, the lowest of 19 participating countries. The UK outperformed the EDF average in labour and capital productivity, and milk yield, at 7,000 kilogrammes a cow.

A separate survey by the International Farm Comparison Network ranked UK production costs as the second lowest in Western Europe after Ireland and below the world milk price of GBP0.26 (US$0.40) per litre. Labour productivity was higher than the IFCN average, while building, labour, capital and feed costs were all lower, it said.

But while producers may be doing a good job of tackling costs, the NFU said farm gate milk prices still languished towards the bottom of the EU milk league table and it called for milk buyers to raise prices before the New Year.

"This summer the UK sat at the bottom of the EU price league table GBP0.04 (US$0.06) per litre below the average," dairy board chairman Mansel Raymond said. "Today, despite farm gate price rises of between GBP0.01 (US$0.02) per litre and GBP0.02 (US$0.03) per litre this autumn, the average UK farmer is still only seventh from the bottom of the league table and GBP0.0325 (US$0.05) per litre below the average price."

Farm gate prices were also below the market indicators of Milk for Cheese Equivalent and Actual Milk Price Equivalent, which sat at GBP0.326 (US$0.51) per litre and GBP0.328 (US$0.51) per litre respectively during October.

"Prices are starting to move in the right direction but there is still some way to go to deliver the profits farmers need in order to invest," Mr Raymond said.