UK holds its own in European group

Published 14 January 16

The UK fared best with three out of the five years to 2014 returning a positive margin, albeit small and after full economic costs, when compared to a select group of European competitors. This was based on data drawn from the International Farm Comparison Network (IFCN).

The UK did not experience the highest margins after cash costs (indication of short-term viability) compared to some of the other EU countries, but it did have a steadier margin (see Figure 1). Most of the group had negative net margins during the five year period when full economic costs were considered (indication of long-term sustainability) (see Figure 2). However, the UK fared best in this comparison with some of the reasons explaining the difference between cash and full net margin results being; amount of paid versus own labour, owner occupation levels and levels of depreciation.

The UK tends to have lower depreciation costs on a ppl basis due to lower investment levels, compared to its European counterparts. This can mean lower costs in the short-term but is this sustainable in the longer term? For more, see the AHDB Evidence Report on GB Herd Performance.

Figure 1: Net margins after cash costs 2010-2014 for milk production in selected EU countries

Evidence report Figure 1 14.01.16

 

Note: Country name indicates the typical farm herd size

Source: IFCN

Figure 2: Net margins after full economic costs 2010-2014 for milk production in selected EU countries

Evidence report Figure 2 14.01.16

Note: Country name indicates the typical farm herd size

Source: IFCN

ECM (Energy corrected milk) = (milk production (l/year) x 1.033 x (0.383 x butterfat (%) + 0.242 x protein (%) + 0.7832)/3.1138): allows comparison between milk types with different solid contents