Dairy farming: why it pays to be in the top third

Farm Benchmarking Data for 2009/10 shows what a difference it makes to overall profit to be in the top of the class.  Dairy farming illustrates this well.

  • Although little different in size, the top dairy farms achieved dairy output of nearly £2,900/ha compared with less than £2,600 for the average;
  • Variable costs were lower too, at less than £1,450 compared with nearly £1,600 for the average;
  • The top farmers did however pay more for labour – over £400/ha compared with less than £300 on the average farms.  This was to some extent offset by the value of unpaid labour on the average farms at nearly £330 compared with about £240 on the top farms.  Perhaps this reflects the use of qualified, professional staff rather than reliance on unpaid family labour irrespective of qualifications and experience elsewhere?
  • Despite higher labour costs in total, the total fixed costs on the top farms were over £60/ha lower than the average farms of nearly £1,700/ha.
  • The cumulative effect of all these differences is where the gap really starts to widen: Net Farm Profit on the average dairy farm of £623/ha compared with over £1,000 on the top third of farms.  And this despite slightly lower milk yields and milk value per cow on the top farms.  The top farms did however achieve a marginally better price per litre for their milk, and worked at a very slightly higher stocking rate (2.3/ha compared with 2.2).
  • This all translated into a return on tenant’s capital for the average dairy farm of 6.1% compared with 20.8% for the top farmers.

This goes to show that success in farming continues to require very close attention to detail, and highlights again the difference between the best and the rest.

For more details of these figures and other farm types see the latest data for Yorkshire, Lancashire and Cheshire published by Askham Bryan College in January 2011: Farming in Yorkshire, Lancashire and Cheshire Benchmarking Data 2009/10.  These data are collected as part of the national Farm Business Survey, and will eventually be aggregated with the data from other regions to produce national farming statistics.

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