North West dairy farmers warned that immediate milk future is downbeat

UK - Specialist dairy farmers in the north-west had a good year in 2005/2006, but prospects for the next 12 months look less rosy, according to a new report from Cumbrian accountant Dodd & Co.
calendar icon 6 November 2006
clock icon 1 minute read
The firm's Rob Hitch said the average farm in the client survey produced a surplus of 0.48p/litre for the financial year ending spring 2006 (see table).

Those in the top 25% had a surplus after drawings, tax and milk quota amortisation of almost 4p/litre. But those in the bottom quartile lost 3.29p/litre.

However, Mr Hitch said the single payment had accounted for a large chunk of this and cost increases this year as well as lower milk prices meant many more farmers would be facing a deficit for the current financial year.

"It is important to note that average profits increased in line with the increase in the dairy premium, now incorporated into the single farm payment. Without this additional payment, the majority of farmers would, after living costs, have suffered a reduction in net worth."

Mr Hitch said one of the survey's most worrying findings was the lack of investment by dairy farmers, even the best performers. "This does not bode well for the future of the industry."

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