Milk price drop leads to fall in GB dairy farm numbers

Poor farmgate returns have been the main factor behind 350 dairy farmers in Great Britain quitting the industry over the past year.

At the end of October 2023, there were a total of 7,500 dairy farmers remaining in England, Scotland and Wales, which shows a decline of 4.5% compared to the same period the previous year. The statistics were obtained from a survey of major milk buyers conducted by AHDB, which also found 70 producers had ceased since its previous survey conducted in April 2023.

Milk price

Falling milk prices are being blamed for the continual decline in dairy farm numbers, which together with escalating input costs, squeezes the life out of producers making a profit.

In September the Defra UK average milk price stood at 36.36 UK pence per litre, a drop of almost 13 ppl compared to the same month in 2022. In addition, despite inflationary pressure on key farm inputs easing, farm costs such as energy, fuel, feed and fertiliser remain historically high, with plenty of volatility in the markets. This has resulted in farm margins tightening.

On the flip side, the average milk production per farm has grown year-on-year but remains steady compared to volumes calculated in April 2023, which indicates a shift towards larger farms.

Improving efficiency and reducing farm costs

In addition, with high milk prices in the latter part of 2022, many farms pushed their cows for increased yields to maximise benefits. However, as 2023 has progressed, farms have been focused on improving efficiency and reducing farm costs. Grass growth for the majority of the 2023 season sat above the previous season and the 5-year average, sustaining milk yields from grazing cows.

In recent months, GB milk production has begun to ease with volumes in September and October down year-on-year by 1.3% and 2.7%, respectively, a trend AHDB has forecast to continue into the new season.

According to the latest Daera census figures released in December 2023, dairy farm numbers increased in the country. The census showed there were 2,613 dairy farms in Northern Ireland with 319,346 dairy cows in 2023. This compares to 2,608 dairy farms in 2022 with 316,775 cows.