Presenting the results of a ‘farmer intentions’ survey at the Outlook 2015 conference organised by the Agriculture and Horticulture Development Board (AHDB) in London last month, AHDB acting senior analyst Luke Crossman said despite a 20% fall in farmgate milk prices, respondents remained positive about their future.
This to some extent was related to imminent changes in the market. In April the whole dairy sector faces the abolition of milk production quotas across the EU.
Positive
“The trend is, the bigger the herd size, the more likely farmers are looking to increase their production,” said Crossman. “The general feeling of the results is it’s fairly positive moving forward.”
The AHDB predicted a 6% increase in milk production over the next two years, which could prove a concern to milk processors trying to deal with volatile market prices.
The survey of 850 representative dairy farmers by herd size and region across Great Britain was conducted last December before recent further deterioration in milk prices. Similar surveys have been carried out each year since 2004. Their aim is to identify confidence together with production and investment intentions. “We have had a complete reversal of the markets since the previous year when it was conducted. Farmgate prices have fallen around 20% compared with the previous year, largely due to the global supply and demand imbalance we have been facing,” said Crossman.
“The outlook we were expecting at the time of the survey was more short-term pressure on prices. However, the longer-term message is still positive.”
Prices
The variation in farmgate prices has been “vast” over the past year, said Crossman. In December 2013 there was around 4p difference between the top and bottom price per litre of milk being paid, he said. This compared with December 2014 when the difference was around 12p/l. This has worsened in the New Year, he added.
Despite this, longer term confidence has remained, said Crossman . “So, overall, even though individual cases may change, we still expect the overall message to be largely the same.”
He added: “Generally the picture is that short-term confidence isn’t as strong as it has been in previous years, but over the next five years, we can still see that there are farmers that are very optimistic about their own businesses.”