Pictured: Rob Hitch
Results of Dodd & Co Chartered Accountants annual profit survey of dairy farmers show some stark results from 2008/09. The figures reflect trading conditions up to 31 March 2009.
Commenting on the figures Rob Hitch, farming partner with Dodd & Co said, ‘These results are quite sobering, despite a large increase in milk prices in 2008/09, increases in costs have meant that very little has ended up in dairy farmers pockets. Given the recent movement in milk prices, particularly to those ex Dairy Farmers of Britain producers, it is hard to see dairy farmers making surpluses in 2009/10 unless there are significant reductions in feed costs or an increase in the milk price.’
Dodd & Co use the figures in their accounts to allow their clients to benchmark their business with others in the region, and provide them with more meaningful information from their annual accounts.
The figures show that the farmers that benefited most from the increasing milk prices tended to be the larger producers, selling more than two million litres of milk. In fact some of the smaller producers saw deficits increase after drawings and tax despite the higher milk prices. The difference between the milk price of the top and bottom quartiles increased, by 39%, to 2.36ppl.
Milk prices increased by 4.88 pence per litre compared with 2008 to 26.61ppl, with costs rising by 4.20 pence per litre. This brought total costs of production to 31.04 pence per litre, an increase of 16% on the previous year.
The sharp reduction in milk prices since March will have eroded margins and it is likely that farmers will once again have to rely on reserves, off farm income or additional bank borrowing where available.
The figures also show that Scottish farmers with historic payments for the Single Payment scheme have an advantage worth over 1.5ppl more than producers in England.
Dodd & Co will once again be at the Westmorland Show and will be happy to discuss the results of the survey and other farming related business and tax matters.
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