Category: Dairy & Livestock

The figures for our ‘Friesian Farm’ dairy model have been updated ahead of the Dairy Tech show and our spring Seminars.  The table below shows the actual results for the last two years, the estimate for the current year, and a budget for the upcoming 2025/26 season.

To recap, Friesian Farm is a notional 220+ cow business in the Midlands with a milk contract on a constituent basis.  It has a year-round calving system, like much of the UK industry, but it is trying to maximise yield from forage.  The figures are for milk years – April to March.

 

It can be seen that the milk price has moved up nicely for the 2024/25 year compared to the previous one – albeit not back to the highs of 2022/23.  It is forecast that there will be a slight firming of milk values again through into 2025/26.

One of the larger changes for the current year, compared with 2023/24 is the increase in overhead costs.  One of the main drivers of this is the continued upwards pressure on dairy wages.  The increase has also been driven by re-investment needs of the business, plus a general inflationary environment on costs.

Despite this, however, the better milk price, coupled with very good cull and calf prices, means the profitability of this dairy business is much improved this year.

The forecast for 2025/26 is for returns to decline a little.  This is largely driven by further overhead cost increases.  It can also be seen that the contribution of the BPS falls to very low levels.  This is a result of payments to farms in England being ‘capped’ at £7,200 for 2025.

Farmgate beef prices continue to fly.  For the week ending 18th January 2025, the GB deadweight all steer price stood at 575.8p per kg – a rise of 13.3p per kg on the week and some 82.2p per kg higher than for the same week in 2024.  Furthermore, for those hitting the R4L specification the price is 586.7p per kg.  With slaughter numbers up on the week, and the year, strong demand is driving the price.

The picture is similar in the lamb market.  The GB deadweight SQQ for the same week stood at 736p per kg – up 12.4p per kg on the week and compares with 608.2p per kg for the same week in January 2024.  Readers may recall last year prices were a bit lacklustre in the first few weeks of the year and then suddenly took-off, rising to 860.50p per kg in mid-April.  Similar to beef, demand for lamb is strong, but supply is tight; GB lamb production in the calendar year of 2024 is estimated to have totalled 267,000 tonnes, down 7% on 2023 and almost entirely driven by a fall in slaughter numbers.

Production

Milk production ended the calendar year strongly.  UK deliveries for December 2024 were 4.2% higher than in December 2023 and 4.7% up on month-earlier deliveries.  After a steady start to the the milk year (April-March) production has seen good gains since September.  Strong milk prices have supported the increase in production and, although the Christmas demand peak has passed, milk price announcements have held pretty firm so far for 2025, supporting the increase in output.

Prices

The majority of purchasers held prices for January as, although production is up, stocks remain relatively low, particularly butter in the UK.   However, within the retail aligned contracts, Sainsburys has lowered their price for the second month in a row; down by 0.05ppl in January.  In terms of manufacturing contracts Arla Direct has increased its price in January by 0.86ppl.  However Arla UK suppliers will receive a -0.27ppl ‘quarterly currency smoothing adjustment’.  Barbers held their price in January and have announced a stand-on in February, for the third consecutive month.

With regards to the global markets, results from the Global Dairy Trade (GDT), often seen as the bellwether, have been mixed over the last few events.  The decline in the average index at the the last event of 2024, was followed by a further -1.4% drop in the overall GDT Price Index at the first auction in January, before recoverying by +1.4% at the event held on 21st January to stand at $4,146.  This compares with $3,493 in January 2024.

Defra has extended the Avian Influenza Protection Zone (AIPZ) to help mitigate the risk of further outbreaks of the disease.  From Monday 27th  January 2025 the APIZ already in force across East Riding of Yorkshire, City of Kingston Upon Hull, Lincolnshire, Norfolk, and Suffolk will be extended to also include the unitary authorities of Shropshire, York and North Yorkshire.  This means captive birds in these areas must be housed and enhanced biosecurity measures need to be followed.

In addition, an AIPZ mandating enhanced biosecurity but without mandatory housing came into force on Saturday 25th January 2025 across all other areas of England, with a similar zone also applying in Scotland (see https://www.gov.scot/news/avian-influenza-prevention-zone-2/).  The latest situation can be found on the Defra website at https://www.gov.uk/government/news/bird-flu-avian-influenza-latest-situation-in-england?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=a3e357f9-f7b5-4a45-b805-c9b91fb3f973&utm_content=daily

The deadline for those invited to submit a full application for a Laying Hen Housing grant has been extended.  Those looking to receive funding to add a veranda onto, or to upgrade or replace existing laying hen or pullet housing to improve animal health and welfare now have until midnight on 28th April 2026 to apply.  More information on applying can be found via https://www.gov.uk/government/publications/laying-hen-housing-for-health-and-welfare-grant-round-1?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=4fca9099-1d98-4ed1-b9a4-fb0b283514b3&utm_content=daily

Dairy farmers are now eligible for Endemic Disease follow-up funding under the Animal Health and Welfare grant.  Readers may recall under an ‘Improve Animal Health and Welfare’ (IAHW) agreement, livestock keepers can receive funding for;

• an animal health and welfare review
• an endemic disease follow-up

The latter was added in 2024 but was unavailable for keepers of dairy cattle.  This is now available and the table below includes the grant rates for each species for both parts of the service;

More information on the funding can be found at https://www.gov.uk/guidance/farmers-how-to-apply-for-funding-to-improve-animal-health-and-welfare

The Government has introduced measures to prevent the spread of Foot and Mouth Disease (FMD) following a case being confirmed in water buffalo in the State of Brandenburg in north west Germany.

A ban has been placed on the commercial import of cattle, pigs, sheep, deer, buffaloes and their products such as meat and dairy from Germany.  GB health certificates will no longer be issued for animals susceptible to FMD including all live animals and fresh meat and animal products.

In addition, as of 15th January it is no longer permitted for travellers to bring unpackaged meat, meat products, milk and dairy products, certain composite products and animal by products of pigs and ruminants into Great Britain from the EU, EFTA  states, Faroe Islands and Greenland.  Furthermore, these products may not be brought to Great Britain from Germany, even if commercially packaged.

The Government is encouraging keepers to be vigilant and maintain good biosecurity measures.  Although FMD poses no risk to human or food safety, it is a highly contagious viral disease of cattle, sheep, pigs and other cloven-hoofed animals and can cause significant economic effects due to production losses in the affected animals as well as loss of access to foreign markets for animals, meat and milk for affected countries.

Production

After a slow start to the milk year (April-March), autumn production has pushed up overall deliveries.  GB production, according to the AHDB, is estimated to have totaled 1,018 million litres in November, up 4.4% compared with November 2023.  For the season so far (April – November) GB production is at 8,279 million litres; 0.4% above the same period in 2023.  Stronger farmgate milk prices, lower feed costs and (according to AHDB) an increase in Autumn block calving, has seen an increase in milk production over the last few months.  In contrast, GB organic deliveries, for the period April – October are estimated to be down by 9.3% on the year to 203.21m litres.

The expectation is for conventional production to remain strong until the end of the milk year due to higher farmgate prices underpinned by strong commodity markets.  The AHDB is forecasting GB milk production for the current milk year to reach 12.43 billion litres; 0.9% more than 2023/24.

Producer Numbers

The latest AHDB survey reveals dairy producer numbers in GB have fallen to 7,200.  This is a reduction of 30 since the last survey in April.  However, when compared with last October’s survey, numbers are down by 300, indicating the majority exited the industry last winter, when margins were particularly challenging.  Better prices throughout the summer looked to have help stemmed the outflow.  The survey also shows the average milk production per farm in GB has now risen to 1.7 million litres per year, showing the continued trend towards fewer, but larger farms.

Prices

Commodity markets are starting to ease as the Christmas trade comes to an end and milk deliveries continue to increase (see above).  However, in the UK, manufacturers have limited stocks meaning prices remain supported, at least for the time being.  But there is an expectation that prices will experience a seasonal decline in the New Year.  At the latest Global Dairy Trade event held on 17th December the overall index fell by -2.8% to average $4,148; this is by far the largest decline since July, the only other two being by -0.4% and -0.3% in September and October respectively.  An early look at farmgate prices for January show both Barbers (Cheese) and First Milk holding their prices.  The former having risen its price for 11 of the 12 months in 2024.

An Avian Influenza Prevention Zone (AIPZ) has been declared across the East Riding of Yorkshire, City of Kingston Upon Hull, Lincolnshire, Norfolk and Suffolk.  The introduction of an AIPZ follows the recent increase in cases of bird flu in poultry and other captive birds in the area and increased reports of ‘mass mortality’ in wild birds.  In these areas all bird keepers must take enhanced biosecurity actions, remain alert for any signs of disease and report suspected disease immediately to the Animal and Plant Health Agency.  As at 15th December, there is no requirement to house birds in the AIPZ, but this is being kept under constant review.  The latest information and a map showing the AIPZ can be found at https://www.gov.uk/government/news/bird-flu-avian-influenza-latest-situation-in-england?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=59ca1e7a-629c-4851-9236-404fdf9a750f&utm_content=daily

Defra has released the UK livestock numbers from the June 2024 Survey; the table below summarises the figures.  As can be seen, for all categories of breeding livestock the numbers are down on 2023.

The total cattle breeding herd has declined by 1.9%, the same percentage change as last year, although this year it is entirely down to a fall in beef breeding numbers as the dairy breeding herd has remained stable.  The beef price has been exceptionally high this year and data suggests there has been an increase in heifer slaughterings as producers take advantage of this (see our beef production article https://abcbooks.co.uk/beef-production/).  This is likely to mean fewer replacements coming into herds and a continual decline in beef breeding numbers next year.  Historicaly margins have been tight in the beef sector and it has been been reliant on the BPS.

The sheep breeding flock has fallen below 15 million for the first time since 2011.  Notably, ewes intended for first time breeding are down by -8.6% on the year, suggesting further contraction of the breeding flock next year.  The sheep sector has received good prices for a few years now, so this is a worrying trend.  Like the beef sector it has been supported by the BPS.  It suggests producers are evaluating their options with the BPS now almost gone in England and due to begin being phased-out in other parts of the UK soon.

The economic climate for pig producers, is much better than this time last year, even so the breeding herd continues to contract.  The female breeding herd decreased by 3.1% to 327,000.  This is the lowest it has been in the past 22 years.  However gilts in pig have risen for the second year running, this year by 4.6% (last year by 13%), suggesting some herd re-building is now happening.  The number of fattening pigs increased by 0.9%, with falling sow numbers this suggests productivity per pig is increasing.

The full Survey results can be found at https://www.gov.uk/government/statistics/livestock-populations-in-the-united-kingdom .